Morningstar

What Toys 'R' Us Bankruptcy Means for Mattel, Hasbro

The narrow-moat toymakers have some time to find alternate channels to distribute their products and prevent future sales shortages that may stem from degradation of the Toys 'R' Us channel.

Securities In This Article
Hasbro Inc
(HAS)
Mattel Inc
(MAT)

Leading toy retailer Toys 'R' Us filed for bankruptcy protection ahead of the holiday season, sending the shares of narrow-moat

The top three retailers represent 39% and 36% of sales at Mattel and Hasbro, respectively, with around 10% allocated to Toys 'R' Us' 1,600 stores; this implies that about 90% of the distribution network remains intact. Sizable partners Target (with 1,800 stores) and Wal-Mart (with around 11,700 locations, representing 18% of Hasbro’s 2016 sales) remain stable players with plenty of financial flexibility to take on incremental product in the toy aisle, allaying immediate concerns about Mattel and Hasbro throughput. Target’s hardlines segment (which includes electronics, music, movies, books, sporting goods, and toys) represented about $12 billion in sales, nearly the same as Toys 'R' Us' $11.5 billion in sales in 2016.

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About the Author

Jaime M. Katz, CFA

Senior Equity Analyst
More from Author

Jaime M. Katz, CFA, is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers home improvement retailers and travel and leisure.

Before joining Morningstar in 2011, Katz was an associate for Credit Agricole Corporate and Investment Bank. She also worked in equity research for William Blair for three years and spent three years in asset management at Mesirow Financial.

Katz holds a bachelor’s degree in economics from the University of Wisconsin and a master’s degree in business administration from the University of Chicago Booth School of Business. She also holds the Chartered Financial Analyst® designation. She ranked first in the leisure goods and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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