Toys ‘R’ Us could go out of business next week, according to several reports

Photo by Jack Taylor/Getty Images

Bankrupt retailer Toys “R” Us may shut all its US stores as soon as next week, according to several reports.

That’s terrible news for the two biggest publicly traded toy companies. Investors are clearly preparing for the worst. Shares of Hasbro fell 3.5% Friday morning while Mattel plunged 7%.

Smaller toy company Jakks Pacific fell nearly 5% too. Canada’s Spin Master, which owns the popular line of Hatchimals toys, was down about 3% as well on the Toronto Stock Exchange.

And everything isn’t awesome for privately held European toy giant Lego either. The plastic bricks maker reported its first sales drop in thirteen years earlier this week. So these are clearly tough times for the toy makers.

A spokesperson for Toys “R” Us declined to comment on the liquidation chatter.

Toys “R” Us recently went into administration in the UK, paving the path for stores there to shut their doors. And the potential closing of Toys “R” Us in America would be a particularly huge blow to Hasbro and Mattel.

According to recent regulatory filings from both companies, Toys “R” Us accounted for nearly 10% of the companies’ overall sales.

Toys “R” Us is the last megastore dedicated to toys. Without it, toymakers will struggle to promote anything but their most popular items.

The death of a top customer is the last thing that Mattel and Hasbro need right now.

Mattel’s overall sales during the fourth quarter (i.e, Christmas) fell 12% from a year ago, led by big drops for the Fisher-Price, American Girl and Lego competitor Mega Bloks brands.

Hasbro reported a decline in sales during the fourth quarter, despite the fact that the Nerf and My Little Pony owner now holds nearly all of the lucrative licenses tied to movies from Disney and its many other studios — Pixar, Marvel and Lucasfilm.

Hasbro said that Star Wars product sales actually fell in the fourth quarter, as did sales of Disney Frozen toys.

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