By Tracy Rucinski , Richa Naidu and Melissa Fares
Now those payments are at risk in a dramatic turn of eventsas the iconic toy retailer speeds toward
More than a dozen executives, specialists and lawyersinterviewed by Reuters said they expected many small vendors togo bankrupt due to the disappearance of Toys 'R' Us and Babies'R' Us in
While the downfall of Toys 'R' Us came quickly in
"We have a
MGA, whose L.O.L. Surprise! toys were the industry's topseller last year, stopped supplying goods to Toys 'R' Us onWednesday, Larian said. Toys 'R' Us accounted for 15 percent ofMGA's annual sales. Larian spent Thursday and Friday on thephone with his lawyers and tending to a bid he and other vendorshave made to acquire Toys 'R' Us' Canadian operations.
“I have been working from 4 a.m. till midnight every day onthis talking to other toy company executives, lawyers, bankers,other retailers," Larian said. "I’m exhausted.”
At a Thursday hearing at
For some, the writing for Toys 'R' Us had been on the wall.Marc Wagman, who heads insurance broker Gallagher's
"Unfortunately, for a lot of these toy companies, Toys 'R'Us represented a means of testing consumer taste, a big retailopportunity and, for some, accounted for 20-40 percent ofrevenue. How that's going to be replaced remains to be seen,"Wagman said.
Toys 'R' Us, with
'I'M LOSING A LOT OF BUSINESS'
“I have a short-term concern about the loss of business, theloss of one of my best partners over many, many decades," saidJoseph Shamie, president of Delta Children, one of the chain’sbiggest vendors of children’s furniture, with roughly 470employees.
He has been selling to Toys 'R' Us for more than 40 years,since he was 19. "I’m losing a lot of business and in veryquick, unmanaged amount of time."
Shamie said his company will continue to supply products toToys 'R' Us stores outside
“I have to create opportunity so I can continue to employthe people I employ," he said.
In a dire landscape that claimed 17 retail bankruptcies andmore than 8,000
Among those that could pick up toy market share: big-boxretailers Walmart Inc and Target Corp; chainssuch as JC Penney Co Inc, Kohls Corp and BedBath & Beyond; drugstores like CVS Health Corpand Rite Aid Corp; and discount outlets like DollarGeneral Corp or TJ Maxx.
“We’ll work really hard with folks like Walmart and Targetto see if they can take up volume by year-end,” said JayForeman, chief executive of Basic Fun!, which sells Cake PopCuties and Poopeez as well as classics like Lite-Brite.
Foreman expects a 10 percent revenue hit from the loss ofToys ‘R’ Us.
He is also working with Amazon.com Inc, which willbecome its second- or third-biggest account this year versusninth in 2015, but said Amazon does not give minimum orders.
“They’ll put it online and say 'we’ll see how it does.' "
Without mass distribution and a physical showcase, co-ChiefExecutive Nick Mowbray of toymaker Zuru Inc said innovationswould become far riskier, leaving a dent in toy selection forcustomers.
"Doing business with a company in Chapter 11 was notsupposed to be a 'gotcha' situation, but apparently in this caseit was," said Learning Resources Inc Chief Executive RickWoldenberg. His
He said his company will no longer supply to Toys 'R' Us. "Idon't know how many times they think we can be punished."(Additional reporting by Tom Hals in