Why Target’s Weak Toy Sales Aren’t Necessarily Bad News for Mattel and Hasbro
Target (NYSE: TGT) reported lower-than-expected holiday sales on Jan. 15, with toys among the weakest product categories. Shares of toymakers Mattel (NASDAQ: MAT) and Hasbro (NASDAQ: HAS) fell 4.6% and 2.1%, respectively, on the news. But this report doesn't mean people are no longer buying Barbie dolls or Monopoly games, and it isn't signaling some sort of toy Armageddon. It means shoppers are buying toys in different places, notably online.
Target's online sales are growing, but Target still is primarily a brick-and-mortar retailer; third-quarter comparable sales gains of 4.5% reflected 2.8% growth in stores and a 1.7 percentage point contribution from digital sales. And according to a pre-holiday survey by Civic Science, online retailers were set to win sales during the season. The report predicted 47% of adults would do their toy-shopping at an online-only retailer such as Amazon (NASDAQ: AMZN). The study also showed that shoppers with Amazon Prime memberships were more than 200% more likely to make most of their toy purchases online compared to those without Prime. Amazon's own holiday report supported this data, with the retail giant saying toys were among its best-selling items.
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