A Mixed Bag For Toy Makers So Far In 2015

A recent report by BMO looked at the performance of toy makers so far in 2015. Analysts are not particularly impressed by what they've seen in the space lately, but they mention a couple of potential positives for toy sales in Q1. West Coast port slowdown lingers Analysts believe that the backlog from West Coast port delays is adversely affecting toy inventory at many U.S. retailers. Discount sellers such as Wal-Mart Stores Inc

and Target Corp

seem to be particularly affected by the port turmoil. Analysts believe many retailers likely missed out on sales because of the port strikes, but note Build-A-Bear Workshop Inc

as the lone exception. Build-A-Bear manages its own channel distribution for its stores. Forex headwinds continue to blow Analysts predict that the strength of the U.S. dollar will continue to pressure earnings for many toy makers. Forex issues will likely hit large, multinational companies such as Mattel Inc

and Hasbro Inc

the hardest. Q1 positives Despite weakness from port disruptions and dollar strength, analysts also see some tailwinds for toy makers in the first quarter. First, the calendar will likely play a positive role in year-over-year Q1 comps for the toy industry. Easter comes 15 days earlier this year than last year, and pre-Easter shipments will mostly occur during Q1 rather than Q2. In addition, low gas prices will continue to contribute to parents' disposable incomes. "Lower gas prices should directly benefit toy sales, giving parents a few extra dollars each week that they can turn around and spend on the kids," analysts explain.