Toy Companies Starting To Worry Coronavirus Could Hurt Supply For 2020 Holiday Season

Toy makers and buyers gather this week in New York for the industry's major confab. Toy company officials are starting to worry about whether they'll be able to get production going in time to have adequate supplies next holiday season with the industry's major manufacturing center, China, wracked by a virus outbreak that has slowed production and halted shipping.

"You cannot get raw materials because of transportation, and when they make the product you cannot take it to the port, so it’s a mess," Isaac Larian, CEO of MGA Entertainment, the California-based maker of the popular L.O.L. Surprise! doll, told Fox Business.

Disruption Talk Of New York Toy Fair

The difficulties posed by supply chain interruptions from the outbreak of the coronavirus, known as COVID-19, have been the talk of the New York Toy Fair, which continued Monday even as fair officials moved forward without many of the Chinese executives who would have attended unable to make the trip because of a U.S. government ban on non-U.S. nationals who have been in China from traveling here.

The Toy Fair's China Pavillion was also canceled this year because of the epidemic.

There have been no known cases of the coronavirus in New York City.

Industry Can't Catch A Break

The difficulties for the industry, which typically starts manufacturing of next holiday season's big toys around this time, follow previous disruptions from the 2017 bankruptcy of Toys R Us and the U.S.-China trade war.

"Crazy times," Steve Pasierb, president and CEO of the Toy Association, told Fox Business. "We can't seem to catch a break."

Last week, shares of Hasbro, Inc. HAS, one of the industry's giants, traded lower on word that the virus could impact its product shipping this year. Both Hasbro and competitor Mattel, Inc. MAT saw their stock drop on Monday even as Mattel said it would resume China manufacturing after a two-week virus-related shutdown.

The window for getting next this year's holiday hits manufactured and shipped to the U.S. is shortening.

"If we don’t ramp up production in the next 30 to 60 days it’s going to begin to affect summer toys — and God forbid — get us into the holiday season," Pasierb said. And with little understanding of how long the epidemic might last, it's tough to plan.

Pasierb also said it's unrealistic for toymakers to simply move the manufacturing, which takes time.

Normally around this time the next big toy might be showing up at the Toy Fair, and the buzz might start. Industry insiders and analysts had expected a certain character from the Walt Disney Co. DIS show "The Mandalorian," to be all the rage.

"Everything right now is 'Baby Yoda, Baby Yoda, Baby Yoda,'" Pasierb said.

But Fox Business reported some toy makers aren't showing off the next big thing because of the uncertainty around the virus.

"It’s pretty uncertain right now as to when this will break through," Pasierb said.

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