Let me start by acknowledging the horrible impact from the wildfires that spread across the Los Angeles area. LA is the epicenter of today’s toy industry, and the tragedy has unfortunately impacted the lives of many of our clients, colleagues, and the toy community at large. My thoughts are with them and their loved ones during this challenging time.
Overall holiday spending for November and December was up by 4% over 2023 and handily beat the National Retail Federation’s estimate of 2.5-3.5%. For the toy industry, the inventory glut of 2023 left companies cash poor in early 2024 and many companies struggled through the first two thirds of the year. Fortunately, strong consumer spending carried the day, and most toy companies ended the year “flattish” while some were up considerably. It wasn’t a great year, but it was solid. Hopefully, the strong roster of licensable kid’s films will bolster greater growth in 2025.
The tricky part will be tariffs. Fortunately, most tariffs have been postponed which gives all parties a chance to negotiate through their differences. That said, it’s hard to see how the U.S. and China will be able to reach an agreement by the postponement date. That leaves the toy industry waiting to see if toys will be included and, if so, what the amount of the tariffs will be. In the last Trump administration, we were able to dodge the tariff regime for several years. Fingers crossed.
People in the business of actually selling toys will certainly have a much more valid opinion than I do, but from what I’m hearing, if the toy industry ends up being tariffed and if the tariffs are 10% or less it will be uncomfortable, but the industry can work through it. Toy companies will beat lower prices out of the factories. They will take lower margins themselves (grrr) and they will try to push retailers to accept some price increases. The last leg of that stool will undoubtedly be the most difficult. Companies should keep their quality teams vigilant. Factories already work on tight margins, and it will be important to keep an eye on what goes on there.
As we speak, the toy gypsies are on the road and have been for more than a month. Every week or so there’s a pit stop at home for the emergency laundering of piles of dirty shirts…and sleeeep. I never seem to get enough at trade shows – late to bed and early to rise. Try to keep your Vitamin C levels topped off in the usually vain effort to ward off the ever-present “tradeshow disease.”
Fortunately, the toy industry is resilient and adaptable. It is never smooth sailing and there are always stormy skies. Stay nimble. Focus on pragmatism, not politics. With apologies to FDR: “The only thing that is certain is uncertainty itself.”
I’ll see you all in New York
Tom Keoughan
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