Hasbro getting hosed by unwilling retail partners

Looks like Business Week has noticed the same problem toy fans have been complaining about:

Kids looking to grab an Iron Man toy after being wowed by the hit The Avengers movie have some choices on store shelves, including leftovers from 2010's Iron Man 2.

Stores, burned after years of slow-selling Hollywood toys, held back on orders for Avengers product. With the film a huge success, retailers, including Walmart and Toys "Я" Us, have been peddling old Thor hammers and Captain America action figures at or close to full price.

The Avengers surprise illustrates the challenges marketers face capitalizing even on hits. Hasbro, which licenses the rights to make many Marvel-related toys, will generate about $150 million in sales from Avengers merchandise this year, according to Gerrick Johnson, a New York-based analyst at BMO Capital Markets Inc.

Normally, a movie that makes more than $1 billion at the box office would produce $250 million to $300 million in toy sales, said Johnson, who has an underperform rating on shares of the Pawtucket, Rhode Island-based company.

"Nobody thought the movie would be this big," said Isaac Larian, chief executive officer of toymaker MGA Entertainment Inc., which doesn’t make Avengers products. "Retailers didn’t buy deep and Hasbro didn't push hard. Sales took off and now they are catching up."

Second-quarter sales of boys' toys at Hasbro fell 16 percent to $389 million from a year earlier, as "strong growth" in Marvel products failed to counter declines in other brands, the company said. Analysts project the company will register $4.27 billion in revenue this year, down slightly from last year's $4.29 billion, so $150 million in lost Avengers sales translates into no growth this year.

No Growth

"Avengers is ahead of expectations and selling well," Wayne Charness, a Hasbro spokesman, said in an e-mailed statement. "Retailers still have some inventory of Iron Man 2 and Thor, but we are well-positioned to meet holiday demand for Avengers products."

Last week, a Toys "R" Us store in central Los Angeles was selling a mask with packaging emphasizing 2010's Iron Man 2 film for $9.99. The same mask in an Avengers wrapper was offered for $11.99 nearby.

The Wayne, New Jersey-based retailer has stocked its shelves with older Iron Man 2, Captain America: The First Avenger and Thor movie products for "an avid collector base, as well as kids," according to Bob Friedland, a spokesman.

You can read the rest of the article for more information, but the gist is clear: stores are using the publicity of The Avengers to sell old product that should have been clearanced out long ago. Good for them, but bad for Hasbro.

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