toy industry jobs

August-September Toy Hiring Surge – Delayed

It seems to be an annual event: as children’s products ship to retailers in late August, companies start feeling more comfortable about meeting their sales goals. Timing coincides with the winding down of summer vacations and the realization that the next year’s annual sales season will begin in a few short weeks in Dallas at the Fall Toy Preview and in Los Angeles at various private toy company events. Almost every year this leads to a big surge in search starts and hiring in late August and September. A surge that this year did not come.

Up until late August, we at Toyjobs saw toy industry hiring as quite strong. In 2012, things turned the corner and 2013 was looking like a return to “not quite normalcy.” Toy industry hiring in early summer was even better than the average during good times, but when late August arrived, not only was there no surge, but activity fell off the table. During late August and September – it was dead.

First off, spring and summer toy sales were extremely sluggish. Also, retailers were very cautious about inventory – ordering smaller numbers and bringing goods in later than ever before. This, in turn, made toy manufacturers nervous.

Coming into the Fall Toy Preview, I was, unfortunately, pretty well-rested and the paper piles in my office were beginning to look small. The good news was that, as I was arriving in Dallas, children’s products were beginning to arrive in bulk to the U.S. Toy companies have now begun to feel better about themselves and search starts have rocketed. Toyjobs is currently in talks with a wide array of companies about to begin new talent searches. Those searches haven’t hit our job board (Current Toy Jobs) yet but stay tuned, they’ll be posted in the coming weeks.

As for the show itself, it seemed noticeably less busy than last year. As always, Carter Keithley and his TIA team put on a superb event, but it just looked like there was quite a bit less traffic. I don’t have the official numbers, but my unscientific survey had three components. First, the Starbucks line was much shorter than last year. Second, the great opening party thrown by the TIA seemed less well-attended. Lastly, it is important to remember that foot traffic at this show can be much higher than it appears because so many people spend much of their day tucked away in little cubby holes. My favorite “metric” is to simply look over the railing down to the lobby floor at lunchtime. This, too, proved to be disappointing. Even when I went down to lunch myself, although the cafeteria was full, I never had any trouble finding a table.

I’m NOT privy to ANY official discussions, but in my gut – I give the show three years…and my guess is that in year four, the Fall Toy Preview constituted as it is now in Dallas will be no more. I certainly hope that is not the case. We all know the reasons that this show is faltering: large toy companies holding private events in LA during the following weeks, buyers making oddly timed trips to Hong Kong, high trade show costs, etc. I’m sure that the TIA and the TIA Board have talked about this until they’re blue in the face, but I would suggest giving a member of either of those groups your input – whatever that input may be. One thing that is glaringly obvious is that there is a disconnect when the TIA Board is largely made up of representatives of companies who do not support TIA events intended to strengthen the toy industry as a whole. With broad input, hopefully a solution can be found that works for everyone.

Just my two cents,
Tom Keoughan

By | October 14th, 2013|ToyJobs Blog|Comments Off on August-September Toy Hiring Surge – Delayed

Economy and Employment Continue Gradual Improvement

U.S. consumers continued to increase spending in July as the economy continued to grind out a slow but steady expansion. The Commerce Department last week announced that retail sales for July climbed a seasonally adjusted 0.2%. They also adjusted the June growth rate upward from 0.4% to 0.6%.

People are seeing the value of their homes and retirement accounts rise, which has begun to create a “wealth effect.” Also, Americans have spent the last few years struggling to shed debt. Total consumer debt is now 12% lower that at its peak in the fall (just before “the fall”) of 2008. Lending and spending are on the rise, especially for the big ticket items like homes, cars, furniture, and my favorite – barbecue grills.

bbqConsumer confidence is increasing and is at its highest level in years, which economists attribute to the gradually improving employment picture. Toyjobs concurs that, at least in the children’s product business, hiring has increased dramatically. On the jobs front, things seemed to turn the corner in 2012 after three dismal years. In 2013, hiring has been much more robust. Even the annual summer doldrums period has seen more hiring than in any of the last five years. [See Toyjobs Success Stories)

That said, there is a puzzling disconnect behind the rise in overall consumer spending and the weak recent showing of many retailers. Wal-Mart, Kohl’s, Nordstrom’s, and Macy’s last week, posted poor second quarter results and cut their profit forecasts for the year. Aeropostale, American Eagle Outfitters, and Abercrombie & Fitch also lowered their sales and profit outlook.

Part of the problem may be that spending for cars, houses, and home improvement may have eaten up dollars that would have been spent on clothing, accessories, and general merchandise. The hope is that once this pent-up demand is sated that spending will trickle down to retail more broadly. After all, one can only buy so many cars and washing machines before you have all you can use.

Spending Habits

Holiday spending, in the aggregate, can be looked at as one big ticket item which bodes well for toy manufacturers. However, consumers will likely chase sales and hunt for value, thereby causing margin pressure on retailers. The question is will retailers eat those margin hits or will they beat it out of their suppliers in small Bentonville rooms.

On the “good news” side of the ledger, Toys’R’Us, which has been reeling as of late, has announced that it plans to add 100 stores internationally by the end of the year. There will be 19 new or reconfigured stores in the US and a total of 51 stores in China by year end. This is good news for two reasons. First, there will be more shelf space to fill which should translate into more goods sold in to the retailer. Also, it appears that ownership of the private entity is investing for growth rather than backing off after recent poor results. We wish them all the best as a strong Toys’R’Us makes the toy industry stronger.

All told, the economy is slowly gaining ground and increasing momentum like a train leaving the station. That said, we should not forget that we currently live in a bifurcated society. Most people have jobs and, for them, things are slowly getting better. However, U6 (the number of people either unemployed or having to accept only part time jobs) is still at 14%. So while 86% of us are doing alright, at least 14% are still struggling.

Fortunately, increased consumer spending on big ticket items should start to trickle down to improve retail sales as a whole. As this couples with increased consumer and business confidence, it should lead to a much better employment picture. This is already beginning to happen. We should all hope that as the train chugs out of the station and begins to pick up speed that the long term unemployed and the under employed will be able to climb aboard. As employers, we should try to haul them aboard when we can.

See ya’ll in Dallas,
Tom Keoughan

 

PS – Dallas Alert! Dallas Alert! If you want to upgrade your sales team for the 2014 sales season, you better get cracking. You should have started two weeks ago!

By | August 20th, 2013|ToyJobs Blog|Comments Off on Economy and Employment Continue Gradual Improvement

Toy Industry Hiring Slowing but Steady

The headline unemployment number has ticked down to 7.5% but the number would be higher if so many people hadn’t left the labor force. “White collar” (who actually wears white collars these days?) unemployment continues to drift between 4 and 5%.

The US economy, while not good, continues to slowly and steadily improve. Employers have been adding around 200,000 jobs a month. That isn’t enough to bring the jobless rate sharply down, but it’s better than the average 140,000 per month that we saw last year.

Housing sales have greatly increased and home prices are up 10% from a year ago. Also auto sales have improved about 7%. The various stock indices are up about 15% since the beginning of the year and consumer confidence is concurrently at a five year high.

Although payroll tax increases and the sequester are depressing consumer spending, upward momentum should begin to grow retail sales after we get through the summer. Economic growth, while still slow, is beginning to build. I liken it to a train just leaving the station.

Toy industry hiring has slowed from the torrid pace set in the first four months of the year, but continues to be steady. I look for this to continue through June and then slow down in July and early August. Come mid-August, toy industry executives will suddenly wake from their beachside slumbers and realize that the 2014 sales season is only six weeks away. The annual sprint to add new sales talent before the Dallas Fall Toy Preview will begin. If the economy has followed through and is continuing to build momentum, then the job areas of the toy industry should follow suit.

That’s my call and, for now, I’m sticking with it. Of course, I’ve always been an optimist. It’s the only way to be.

All the best,
Tom Keoughan

By | June 5th, 2013|ToyJobs Blog|Comments Off on Toy Industry Hiring Slowing but Steady

Toy Companies Hiring at a Torrid Rate

Job growth appears to be slowing even as the headline unemployment number has ticked down to 7.6%. Unfortunately, the reason for the lower number is not job growth but rather that labor force participation has been plummeting.

Things are better than they appear for our audience. People who work in an office and wear a collar have a much lower unemployment rate of 4 to 5%. Also, toy industry folks seem to be very good at creating consulting opportunities for themselves.

Here at Toyjobs, we’ve been on fire! (Success Stories) We’ve filled so many of our client’s key positions during the last few weeks that our job board is beginning to look anemic. Search starts have slowed over the last two weeks but I attribute this to the event-driven nature of toy industry hiring.

We have entered the annual phase of the calendar where a large percentage of toy execs that I speak with are complaining that retailers are “late” with their orders. Of course, the retailers don’t think they’re “late.” They’re just pushing as much risk as possible onto their suppliers in a seasonal fashion business. In a few weeks, these orders will come in. Some of those will come so late that it will be impossible to secure factory time, manufacture, and ship the goods for arrival at the time that the retailers want them. Many toy companies will do the impossible and either get the goods there at the appointed hour or find ways to roll back the delivery date.

When the orders come over the wires, toy executives will both grumble and breathe a sigh of relief. They will also need more people to get the work done which will trigger the next wave of toy industry job openings. Except for a few ugly years, like 2009-2011, the dogs bark but the caravan passes on.

All the best,
Tom Keoughan

By | May 1st, 2013|ToyJobs Blog|Comments Off on Toy Companies Hiring at a Torrid Rate

PlayCon a Big Success – Toy Industry Adds Jobs!

In mid-May I attended my first PlayCon in Washington, DC, and I confess that I really didn’t know what to expect.  I must say that I was beyond pleasantly surprised.  The event was held at the Gaylord National Convention Center, a beautiful facility situated right on the Potomac.  It was self-contained, easy to navigate, and within easy walking distance of several outposts of well know Manhattan restaurants.

After we were jolted awake by a combination of caffeine and an opening bagpipe ceremony, we settled in for a very meaty schedule of speakers.  I’m not going to reveal here what they had to say (for that you would have to actually go) but I will give you a brief rundown of topics.

 

The first two speakers, Anita Frazier of NPD and Sean McGowan (who everyone already knows) provided hard data about trends in both the toy industry and some adjacent businesses.  It was valuable to be able to confirm some things that you mostly knew in your gut, but more importantly some of the data was counterintuitive; especially on the hot topic of apps (it’s not just about product without inventory).

Well known children’s product consultant Tom McGrath then spoke at length about both the art and the science of license selection.  Licensing can be very hit and/or miss, and Tom was very forthcoming about many of his wins and losses, why they occurred, and what he learned from them in hindsight.

Next up were Lego and Mattel.  Everyone was thankful to them for opening the kimono on the why’s and how’s of their consumer research programs and I think we were equally grateful to Messrs. Wann and Barbour for refraining from revealing exactly what was under their kilts!

After lunch, Brian Torney of Kunoichi led an interesting panel about how to think about marketing in the digital world which also featured Hasbro’s Chief Visionary Steve Drucker.  Steve peered into his crystal ball to prognosticate where technology might lead the children’s product business ten years in the future and beyond.

After breaking into workshop subgroups, everyone returned to see Bob Wann do a Q&A with senior Amazon executives Jon Witham and John Alteio.  They discussed how to best do business with the online retail giant and also drilled down into the detail of how to optimize your product pages in order to sell more goods.

Lastly on day one, Bob Wann interviewed Neil Friedman who brings a unique perspective from spending a lifetime in the toy business including senior positions with both Mattel and Toys R Us.  They talked about how manufacturers and retailers can work together more proactively and effectively.  It is all about managing expectations; doing what you say you are going to do and most of all communication.

Day two kicked off with LeapFrog President (and former TRU senior executive) John Barbour speaking with TRU SVP Merchandising Richard Barry. After that we dove back again into the world of consumer research.  First, with George Carey of brand strategy agency The Family Room who brought his unique perspective (backed by data, of course) on how families actually make decisions.  It made perfect sense but was not at all what I thought it would be going in.

Renee Weber, VP Consumer Research for The Marketing Store, then spoke on the really big picture about some of her groups’ findings and how they have translated into the design of McDonald’s Happy Meal toys.  Lastly, a lively panel on consumer research led by the very entertaining Paul Kurnit, toy advertising consultant at Kurnit Communications. (You can sign up for his RSS feed at psinsights.com)

Kudos go to Bob Wann and Shirley Price and the conference planning committee: Lourdes Arocho, Joel Berger, Mary Couzin, Richard Gill, Richard Gottlieb, Sharon Hartley, and Manuel Torres for putting together a program that was jam-packed with information.  I would also like to commend all of the speakers for the spirit of sharing which prevailed throughout the entire conference.  The content delivered at PlayCon was broad, deep, and thought-provoking.  While everyone may know parts of this stuff, I think I can safely say that everybody in attendance was able to bring home some immediately implementable takeaways.  If you weren’t there then you are just that much behind your competitors.

One thing I have learned over the last few years is that any event with Carter Kethley’s thumbprint on it is going to feature great food!  At PlayCon, he did not disappoint and as always was the perfect host.  Everything ran so smoothly that I realized that while the Toy Industry Association’s (TIA) Event Staff all appeared to be as serene as swans, they must have been paddling like hell underneath!  Shout outs go to:  Marian Bossard, Kimberly Carcone, Jackson Wong, Robyn Gibbs, and Kimberly Catucci.

PlayCon was a great place to network and meet new industry colleagues but more importantly for me a great place to solidify existing relationships away from the frenetic pace of trade shows where everyone is focused on selling – as they should be.

In other news (great segue, huh?) the U.S. had a pretty weak May jobs report.  Employers added a seasonally adjusted 69,000 jobs last month and the estimates for the two previous months were adjusted downward.  The unemployment rate moved up from 8.1% to 8.2%.  To be completely accurate there has been some discussion that the Labor Department’s seasonal adjustment equation has been thrown out of whack.  Read more here.

Factors contributing to the weak jobs report include the warm winter leading companies to hire seasonal workers earlier which boosted winter job growth while stealing from spring hiring.  Additionally, renewed concerns about Europe with Greece, Spain and Italy all having trouble borrowing to finance their government spending has been unsettling.  This could potentially lead to a domino effect amongst financial institutions.  More importantly, the European recession will be a drag on global economic growth especially now that Asia (which has Europe as its largest customer) is now starting to slow.  Lastly, there is the domestic political situation including the pending fiscal cliff which could drive the US into recession and may be causing businesses to hold off on hiring.

Anecdotally, here at Toyjobs we have seen toy companies continue to add to their staffs at a rapid clip.  Toy search starts have also continued to be strong.  That said, we are just about to enter the summer doldrums where for thirty years Toyjobs has seen certain regular patterns in both good economies and bad.  I expect search starts to slow in the next week or two as the annual summer slowdown begins. Jobs will continue to be filled through the first three weeks of July as searches that began in May and June are completed.  At that point things will be very slow until the last week or two of August when search starts begin to ramp up in response to the upcoming fall sales season. (Fall Toy Preview will be right around the corner.)

My concern is that due to either an implosion in Europe or continued brinksmanship and bipartisan idiocy in Washington, DC, employers may sit on their hands come late August and that the annual search start bounce will be muted.  Most pragmatic people realize that the current tax and spending regime should be extended through 2013.  We’re going to have an election in November to determine which ideological (idiot-logical?) path the country is going to take, but in the meantime let’s hope the politicians do not drive the bus off of a fiscal cliff.  Since an extension is likely to be what happens anyway, let’s root for it to happen now so that businesses can plan which will hopefully lead to hiring and business investment.  In the current political environment, however, I am not going to hold my breath.

Moving forward, we do have a few reasons to be optimistic.  The biggest job loser in May was construction, which shed 28,000 positions.  The industry lost hundreds of thousands of jobs as the residential housing market collapsed.  In May, heavy construction jobs also began to be cut as the money for “stimulus/roadwork everywhere” has begun to come to an end.  However, few other sectors actually cut jobs.  Most simply did not hire much.  One exception was the transportation and warehousing category, which added 35,000 jobs, mostly in railroads and trucking.  Transportation is generally considered to be a leading indicator of economic growth.  Secondly, Wal-Mart is growing again.  First quarter earnings rose 10% as the retailing behemoth saw US customer traffic and average purchases rise.

So, the US economy is still growing albeit not quickly enough and faces headwinds in European and Asian economic slowdowns and a few potential landmines from Europe and Washington DC. I’m moving forward but cautiously with the feeling that if we can just avoid the landmines everything will be alright although not as good as I would like it to be.

Overdue Updates

Since the beginning of the year, I’ve been running so hard on the hamster wheel that a few things have popped up that I didn’t really have time to digest so I’ll share them with you here:

  • Toyjobs received a Constant Contact 2011 All Star Award for our newsletter which you are reading now.  I would like to thank all of our readers for taking the time out of their busy schedules to look us over every month or so.  I would also like to thank all of you who send in positive feedback after each publication.
  • Secondly, I have been elected to the Board of The Pinnacle Society as Treasurer.  The Pinnacle Society is a group limited to 75 of the top executive recruiters in North America and I would like to thank their membership for being in excellent long-term educational asset as well as for putting their faith and trust in me.

So that’s it.  Enjoy the summer slowdown.  I hope you all have a chance to step off of the daily hamster wheel and spend some time relaxing and recharging your batteries for the next go round.
Moving Ahead Cautiously,

Tom Keoughan

By | June 19th, 2012|ToyJobs Blog|Comments Off on PlayCon a Big Success – Toy Industry Adds Jobs!

Toy Jobs Hiring Surge Continues

Toy jobs hiring has continued to surge as companies continue to add people because “we just can’t get the work done.” The common refrain that I hear is that retailers continue to increase the number of hoops that a manufacturer must jump through in order to get their products placed. During The Great Recession, companies cut so many people that they no longer have enough hands on deck to push all the work through in a timely fashion. Search starts continue to be strong despite last month’s flat unemployment numbers. It will be interesting to see what Friday’s jobs report looks like

A week and a half ago, I returned from The Pinnacle Society’s Spring Conference. This is a group of seventy-five of the country’s top executive recruiters and they are truly “The Big Dogs of Recruiting.” As you might imagine, the years 2008-2011 were difficult ones for the recruiting business and approximately 40% of the recruiting firms that existed in 2007 are no longer with us. In speaking with fellow Pinnacle Society members in 2011, the mood was patchy with some recruiting specialties (notably IT, insurance and accounting) returning to a semblance of normalcy while others continue to flounder. At Toyjobs, 2011 saw great improvement over the depths of 2009 and 2010, but it was still nothing to write home about. Heading to 2012’s Spring Conference, I was feeling optimistic because since the end of Hong Kong Toy Show, toy industry hiring had been soaring. At the Conference, I soon learned that hiring was back close to normal across all industry specialties. Of course, these are the country’s top executive recruiters so their numbers are likely to be stronger than the economy’s as a whole, but I see this as a strong leading indicator of more good things to come in the US employment market. Let’s all hope it continues.

Cautiously breathing easier,
Tom Keoughan

 

P.S. What is it with these Wal-Mart Vice Chairmen? First, we had Tom Coughlin pocketing a cool half million in gift cards for his personal use and now The New York Times alleges that Vice Chairman Edward Castro Wright was involved in a regular program of bribing local officials to facilitate the granting of leases and building permits while he was running Wal-Mart de Mexico. To date, these allegations have not been proven and we should all remember that The New York Times has a record of being a little aggressive at grabbing headlines and a little lax in their fact checking (Does anyone remember Iraqi Weapons of Mass Destruction – not to mention yellowcake). That said, many of us are aware of the sometimes strange practices one has to engage in even here in the United States just to get a permit to add screens to a porch. As a Wal-Mart shareholder, I’m upset but have to admit that I consider this a much better use of company funds than nicking three 12 gauge shotguns, a few half gallons of vodka, a large polish sausage, and a lone Celine Dion CD and hailing them back to your private compound for what must have been some sort of unholy (or at least unwholesome) secret Ozark ritual. In any case, just don’t be caught trying to give a Wal-Mart buyer a soda.

By | May 2nd, 2012|ToyJobs Blog|Comments Off on Toy Jobs Hiring Surge Continues

The Toyjobs Annual Review and Forecast 2011

Retail sales jumped out of the box quickly in November and overall holiday sales were strong despite a slowdown in late December. The International Council of Shopping Centers said that its index for November and December was up 4 per cent over last year, the most robust growth in the holiday shopping season since 2006. According to MasterCard SpendingPulse US retail sales, excluding automobiles, rose 5.5 per cent between November 5th and December 24th. Online sales grew 12 per cent to $32.6 billion, the highest total ever, according to tracking firm ComScore Inc.

While the big blizzard and rainstorms in California appeared to take a late month toll many retail analysts said the real culprit behind the weaker December sales was an avalanche of aggressive promotions in November. These deals pulled sales forward and raised unrealistic expectations about consumer spending for the rest of the year. In addition, promotional discounting was so deep that it affected retail profitability. Of course, we still don’t have the numbers for January gift card redemptions. Gift cards are particularly profitable because consumers tend to spend a bit more than the value of the card. Also 20-30 per cent of gift cards never get redeemed at all, making them the retail version of “printing money”.

So, in any case, after a fairly strong holiday sales season much of the toy industry sporting tender holiday heads, hopped on planes bound for the Hong Kong Toy and Games Fair. As I talk to senior toy executives what I am hearing is that US retailer attendance continues to grow lighter but international buyers have been upbeat. In the US, retailers overbought a little in 2010 and are now more cautious but not overly so. Manufacturers are pleased that Wal-Mart is expanding its toy aisle again, at least during the holiday shopping season.

The biggest discussion is about the continuing rise in production costs. China has a serious inflation problem and the authorities have been trying, mostly unsuccessfully, to repeatedly tap the brakes. Raw material costs are rising and the yuan is strengthening. Add to that a nearly 20 per cent hike in the Dongguan minimum wage and constant rumors that many workers will not return to southern factories after the Chinese New Year. Chinese authorities have been trying to push low-end labor intensive manufacturing to the north and west. Inexperienced factories and inexperienced workers will naturally lead to heightened quality problems. Add to this, that shipping back to the coast on overcrowded roads (such as they are) is bound to slow things down. Despite this I expect retailers to continue to confirm orders later and later leaving manufacturers with impossible to meet lead times. The big question is will they allow manufacturers to pass through rising costs by increasing their holy price points.

This is all, however, against a backdrop of an economy that is clearly gaining momentum. Private sector employers added 297,000 jobs in December. The gain over the November numbers was the largest in the reports 10 year history. Outplacement firm Challenger, Gray and Christmas, said that layoffs in 2010 were the lowest since 1997. The unemployment rate in December dropped from 9.8 per cent to 9.4 per cent and while some economists voiced disappointment, they seem to have forgotten that most companies operate on budgets. In late 2009, when 2010 budgets were being drawn up, many companies were still worried that the world was coming to an end. 2011 budgets put together in late 2010 seem to reflect that companies are “cautious but comfortable”. All eyes should be firmly focused on the January – April employment numbers.

Anecdotally, Toyjobs saw search starts pick up since late October. Companies were telling us “find people now that we can start in January when we have the budget”. Since January 3rd we have seen a huge surge in search starts. This isn’t yet reflected on our job board because we tend to post searches toward the end of our work on them in order to keep LRWRB (Lonely Recruiters Without Repeat Business) at bay. I believe we will see this surge moderate as we move into the May/June time frame because it represents pent up demand just waiting for a flip of the calendar page to make budgets available. That said, I do think that hiring will continue to be much stronger than last year but it won’t be wholesale hiring. It will be companies filling necessary positions that were previously left open due to a mixture of fear and budgetary constraints.

On the road (or maybe “in the road”) leading to Toy Fair I have been flipping through the trade press and perusing new products. I regret to announce that Toyjobs has to once again present it’s much avoided “You’ve Gotta Be Kidding Me Award”

Wild Creations introduces Poo in a Box. Yes, really. This nutrient-rich animal dung comes from an elephant, reindeer, or rhinoceros. From the Natural History Museum, the Poo in a Box begins at a British zoo or safari park and is treated to be germ and odor free. Kids can sow the seeds, water the cardboard box, and watch the plants grow. Poo in a Box comes in three styles. Elephant poo with Christmas tree seeds, Reindeer poo with rose seed or Rhino poo with a banana tree seed.

Toyjobs predicts, that if this product sells well, the nation’s schoolyards will see a lot of tiny tears wearing pigtails in the coming year.

After the not so secret stealth fighter, the Gates trip to China and Hu Jintao’s visit to the United States; our China Report (and I’m sure you too) have been inundated with a flood of articles on China. In a not entirely successful attempt to stick a thumb in the dyke of this flood of information we have tried to focus on content that is: the most important stuff, more analysis than news reportage and is from unique sources that many of your may not regularly peruse.

Lastly, I would like to say, personally: Kudos for Neil Friedman. Mr. Friedman has been one of those rare combinations of savvy toy executive, a strong manager and an all around great guy who treated everyone he dealt with fairly and with respect. He’s fun too! I know that I join everyone in the toy industry in greedily hoping that Neil won’t be hanging up his cleats and will pop up somewhere else soon – hopefully leading a small to medium sized company where it can all be fun again.

I look forward to seeing everybody in February. There will surely be snow.

Tom Keoughan

P.S. For those in the know: Infomercial Dave – what’s he selling Snuggies or slapchoppers? Just a further revelation of his Huckster’s Heart.

By | January 25th, 2011|ToyJobs Blog|Comments Off on The Toyjobs Annual Review and Forecast 2011

TRU Board Wakes Up…Finally

The Toys ‘R’ Us board finally awoke from a deep five year slumber when one of their members suddenly came to and was heard to shout: “Dude, Where’s My Company?”  The Dude had spent the last year building a mega million dollar headquarters, buying pricey Stargates and awarding himself 5 million dollar bonuses while Walmart ate all of his lunch and a large portion of his dinner too.  This is the second toy retailing institution that…Well, you know.  None of this was able to rouse the board and they seem still to be a bit drowsy because The Dude is still around although we suspect that he’s no longer really at the helm. (Step up Mr. G.)

At this time, it’s difficult to say exactly how this will affect toy manufacturers, except that it won’t be good, because TRU has not provided very complete information and isn’t answering any questions.  Looking back over the last five years perhaps we shouldn’t assume that they know what they’re going to do at all.

It appears that the board, The Dude and several senior executives are going to jump ship and hop into the much smaller but much healthier lifeboat of Babies ‘R’ Us.  How the separation will be achieved is pretty much open to speculation.  Speculation at the expense of others can be a fun and stimulating pastime and so we’ll give it a go.

First, it seems fairly certain that TRU will shutter a significant number of unprofitable stores (100+) and either sell off the real estate or sell off long term low rent leases similar to what K-Mart recently did.  This would be a smart move and could raise significant capital.  The question is what will they do with the cash?  They could return it to shareholders – not very likely.  Since it is toy stores being sold they could give it to the remaining toy division to patch up and rebuild.  Perhaps, but I suspect that the toy division will mainly end up being recapitalized by selling off its international unit.  It could go to Babies ‘R’ Us along with the board, The Dude and the rest of the ship jumpers…hmm.  Babies ‘R’ Us could use the loot to fuel a long term growth strategy or it’s also likely that they may need a brand spanking new mega million dollar headquarters and perhaps their own Stargate or two.  As a registered cynic, I suspect that is where most of the money will go with just enough being given to the toy division to keep up appearances and satisfy the board’s liability insurance company.

The toy business could be sold to a strategic partner but I don’t think that they are exactly lining up and any strategic buyer would have to be so incredibly stupid that there would be very little chance that they could ever fix the damn thing.  It could be spun off to shareholders.  “Dear Shareholders, please accept this falling knife as a symbol of the esteem in which we hold you.”

What would seem to make the most sense would be for the toy business to be either taken private or sold to a private equity group. Without having to waste time, money and energy on the wacky growth strategies needed to please the equity investors who somehow never figured out that this was a mature business; a slimmed down, better operated toy division could be a real cash cow.  In these uncertain times there is nothing wrong with cash.  I like cash.  Please send ME your cash.

A possible silver lining in all of this is that the toy division will be run by John Barbour who recently ran Toys ‘R’ Us International.  John is a smart, honest, hardworking guy who very importantly has spent most of his career on the manufacturers side.  Hopefully, this might mean he will be more willing to “partner” with his vendors and less likely to pull the type of crap that Toys ‘R’ Us has become all too well known for over the last ten years.  This idea should be tempered though with the knowledge that Mr. Barbour will be performing emergency surgery and has an extremely tough job ahead of him (note: Mr. Markee opted to hop into the lifeboat.)

In the very short term our eyes are riveted on the words: “150 million dollars in writedowns.”  Toys ‘R’ Us is genetically incapable of swallowing this type of a thing and vendors had better watch out.  The company’s long term motto for vendors – “When we suck, you pay!” will certainly be in force.

How does all this affect toy industry hiring?  Hiring has continued to be robust through July.  In fact, at Toyjobs, July was our best single month in twenty three years of practice.  Most of this can be attributed to closing out searches which began in May and June.  New search starts in July slowed due to the usual seasonal fluctuations and the same appears to be happening in early August.

For the year, toy industry hiring has been way up with the exception of Mattel which seems to be desperately trying to manage earnings through layoffs rather than growth.  The economy has turned the corner, although as I’ve said before, the toy industry uptick has been much more muted.  This is likely because the industry’s problems are not caused by consumer demand but by retailers.  These troubles will continue until someone devises a new method if distribution which lessens dependence on Walmart, Toys ‘R’ Us and the like.  So far, I’m not smart enough to figure that out, but hopefully someone will be.  In the meantime, toy companies have been running so lean over the last couple of years, that even a modest upturn have left manufacturers scrambling to get the work done and every company seems to need a couple of extra pairs of hands.

Up until last week’s news, I was predicting that the summer recruiting slowdown would end in late August as it usually does and that hiring would be strong through the end of the year.  The TRU news throws a new uncertainty into the mix and I suspect that until there is more explicit information that toy companies will temporarily act like deer staring into headlights until they can figure out how all this affects them.  Ultimately, Walmart and Target will come a-knocking, looking for samples – faster, earlier, cheaper and with lots of changes and toy companies will be forced to hire people to get the job done.

While people are currently enjoying a slower, more relaxing summer pace; the combination of last weeks news and the fact that October Toy Fair is not as far away as it looks has prompted us to include the following article as a public service.  It provides some techniques purported to help us each to reduce stress in the workplace (toy business? stressful?).

Will they work?  I don’t know yet but I’m going to start practicing now.  By the time the September ramp up rolls around it will be way too late.

All the best,
Tom Keoughan

By | August 17th, 2004|ToyJobs Blog|Comments Off on TRU Board Wakes Up…Finally

Licensing Show Buzzing For A Change

Licensing Show was humming even though the hottest thing there was the weather.  One senior retail executive we spoke with thought that the Nickelodeon and Dreamworks lines looked very promising.  Traffic seemed way up from the last two years and the mood was generally very positive with manufacturing companies looking to do something.  Of course, with the continued dumbing down of the retail buyer, unless you have a big well known brand, a hot license is about the only way in the door.

It will be interesting to see how the trend of retailers going direct to the licensor and the Asian factory will work out.  We’ll see how they like it when they get stuck with a couple million pieces of licensed merchandise from a movie flop.  I hope they’re hungry.  This practice may shave a few nickels from their cost, but greatly increases their risk.  It will be fun to watch the buying wonks deal with that – risk-taking being completely alien to the species.

Toy industry hiring has continued at a rapid pace although the number of new searches has begun to slow due to seasonal factors.  The combination of summer and sweat and fingernail biting over ever late orders causes an annual cool down at this time.  New jobs should begin to ramp up again by mid August, and we foresee robust hiring throughout the end of the year.

All the best,

Tom Keoughan

By | June 17th, 2004|ToyJobs Blog|Comments Off on Licensing Show Buzzing For A Change