There's trouble in toyland, and companies are blaming Toys R Us.
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Mattel, the maker of Barbie dolls and Hot Wheels cars, reported disappointing third-quarter results late Thursday and said it was hurt by Toys R Us' Chapter 11 bankruptcy filing last month. Earlier this week, Hasbro, the maker of My Little Pony and Monopoly, also blamed weak results on the Toys R Us bankruptcy filing.
Both companies said they temporarily slowed shipments to Toys R Us ahead of its bankruptcy, and both said they are working with the retailer to get their toys on its shelves during the holiday season.
Toys R Us had said when it filed for bankruptcy protection that it planned to work with suppliers and would keep its 1,600 Toys R Us and Babies R Us stores open. It did not immediately respond to a request for comment Friday.
Even before the Toys R Us bankruptcy, toy makers have had trouble selling their goods to kids today, many of whom would rather play with an iPad. Lego said last month that sales of its colorful bricks fell for the first time in 13 years, and announced plans to cut 1,400 jobs.
Mattel, whose revenue in North America fell 22 percent in the three months ending Sept. 30, said that about half of that decline was due to the Toys R Us bankruptcy.
Globally, most of its brands saw sales declines. Barbie sales fell 7 percent and Hot Wheels fell 6 percent. Sales of its American Girl brand, whose 18-inch dolls typically cost more than $100, fell 30 percent.
"We suspected a rough quarter ... but that was really tough," said analysts at Jefferies.
To try and turn the company around, Mattel said it plans to cut $650 million in costs over the next two years. It will also suspend the quarterly dividend it pays shareholders beginning in the fourth quarter.
Shares of Mattel Inc. fell $1.37, or 9 percent, to $14.00 on Friday. Its stock has lost about half of its value since the beginning of the year. Hasbro shares dropped about 2 percent on Friday.
But it's not all tough news in the toy world: FAO Schwarz, whose famous New York toy store was shut down two years ago, said Friday it opened 190 FAO Schwarz sections inside Bon-Ton, Carson's and other department stores that sell piano mats, stuffed animals and other toys.