What Toys 'R' Us Bankruptcy Means for Mattel, Hasbro
The narrow-moat toymakers have some time to find alternate channels to distribute their products and prevent future sales shortages that may stem from degradation of the Toys 'R' Us channel.
Leading toy retailer Toys 'R' Us filed for bankruptcy protection ahead of the holiday season, sending the shares of narrow-moat
The top three retailers represent 39% and 36% of sales at Mattel and Hasbro, respectively, with around 10% allocated to Toys 'R' Us' 1,600 stores; this implies that about 90% of the distribution network remains intact. Sizable partners Target (with 1,800 stores) and Wal-Mart (with around 11,700 locations, representing 18% of Hasbro’s 2016 sales) remain stable players with plenty of financial flexibility to take on incremental product in the toy aisle, allaying immediate concerns about Mattel and Hasbro throughput. Target’s hardlines segment (which includes electronics, music, movies, books, sporting goods, and toys) represented about $12 billion in sales, nearly the same as Toys 'R' Us' $11.5 billion in sales in 2016.
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