MAT Mattel Inc

By Paul Ziobro 

"Star Wars" is causing a great disturbance in the toy aisles.

Wal-Mart Stores Inc., Target Corp. and other retailers have loaded up on plastic lightsabers, robotic Yodas and other toys tied to the coming movie, crowding out shelf space and inventory dollars elsewhere in the toy section. The big bets are pushing orders for toy makers such as Mattel Inc. closer to the holidays and squeezing some smaller competitors in the $22 billion U.S. toy industry.

One property hit hard: "Peanuts."

Iconix Brand Group Inc., which controls the license to the newest animated Charlie Brown movie, this month cut its sales outlook from "Peanuts" licenses by $24 million for the year largely because it miscalculated how many Snoopy dolls and other "Peanuts" products retailers would buy.

Iconix Chairman Peter Cuneo said retailers devoted much more space than expected to the "Star Wars" brand, rather than gamble on an older property such as "Peanuts" that is being reintroduced to a younger crowd.

"If they have to make a choice between the new guy on the block, 'Peanuts' and 'Star Wars,' they're going to choose, and they have chosen, 'Star Wars,' " Mr. Cuneo said last week.

Retailers often make extensive changes to toy aisles from year to year, owing to what movies or television shows are popular with children, or what hot toys have emerged. But this "Star Wars" release has been different: "The Force Awakens" is the first since Walt Disney Co. bought Lucasfilm Ltd. for $4.1 billion in 2012. Disney organized retailers to carry out "Force Friday," an event that trumpeted the first release of "Star Wars" toys, in early September. And it continues to build hype with the release of new trailers ahead of the Dec. 18 film release.

"Star Wars" toys could generate $2 billion in sales in the last four months of 2015, according to Sean McGowan, an analyst at Oppenheimer & Co. That would help the toy industry log one of its best holiday seasons in more than a decade. Toy sales are up 8% through the first three quarters of the year, according to data tracker NPD Group Inc., after a 4% increase in 2014. This comes despite more muted projections about overall holiday spending.

Some of the "Star Wars" gains are coming at the expense of other toys. For instance, the "Teenage Mutant Ninja Turtles" brand had some of the top-selling toys last year, helped by a summertime action film, yet lost 20% of its Target shelf space this year to "Star Wars." A spokesman for Viacom Inc.'s Nickelodeon unit, which owns the "Turtles" property, said retailers have already committed more shelf space for "Teenage Mutant Ninja Turtles" toys in the months leading up to next year's movie sequel.

Meanwhile, Target displays that once housed "Frozen" dolls now feature BB-8, a remote-control "Star Wars" character. "Frozen" is also a Disney property.

"There's a lot of oxygen being sucked out by 'Star Wars,' " said Jay Foreman, chief executive and owner of the Bridge Direct, a small Boca Raton, Fla., toy company. Mr. Foreman said orders for WWE wrestling-ring construction sets and other boys' toys have softened this year.

The early buying tied to the September "Star Wars" event also pushed other toy orders later into this year. Three of the largest publicly traded U.S. toy companies, Hasbro Inc., Mattel and Jakks Pacific Inc., all recently reported a shift of wholesale orders from the third quarter into the fourth. Mattel attributes part of the shift to retailers investing so much money on "Star Wars" inventory, a person familiar with the matter said.

Hasbro, which is one of the top licensees for "Star Wars" products, attributes the shift mostly to a yearslong trend by retailers wanting to stock inventory closer to when they plan to sell it. " 'Star Wars' didn't change the trajectory of Nerf, Play-Doh, Monopoly or any brands that grew," Hasbro Chief Executive Brian Goldner said in an interview.

A spokeswoman for Jakks, which makes 48-inch-tall Darth Vader toys and other "Star Wars" figures, declined to comment.

Retailers see "Star Wars," with nearly 40 years of history and legions of superfans, as a safe bet, especially with 10 years of pent-up demand since the last movie. But even with that comfort, stores couldn't truly gauge demand for the toys until people started shopping, especially given a number of new characters with this year's movie. Because of a Disney embargo, retailers were also blocked from using the new toys in children's focus groups as the retailers shaped their lists of top toys.

Wal-Mart started analyzing the sales data coming in after midnight on Sept. 4 and quickly adjusted ordering plans for the coming weeks and months. "We are able to increase the forecast on some items and decrease the forecast on some others," said Scott McCall, a senior vice president at Wal-Mart, though he declined to be more specific.

Heading into the Black Friday shopping event on the day after Thanksgiving, Wal-Mart, Target and Toys "R" Us Inc. have more than doubled the space for "Star Wars" toys, including special displays at the end of aisles or front of their stores. "It's one of the best entertainment properties that has specifically sold toys," said Richard Barry, chief merchandising officer for Toys "R" Us. "We know Disney paid a lot of money for this brand and they really want to work and get payback."

Write to Paul Ziobro at Paul.Ziobro@wsj.com

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(END) Dow Jones Newswires

November 15, 2015 18:13 ET (23:13 GMT)

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