My comments about the TRU CEO’s bonus payments in last week’s Blog certainly seemed to strike a chord, judging by the huge number of emails and comments I received. It is clearly a contentious subject. Without wishing to pour oil on troubled waters, I found out a few other interesting things this week; for instance, did you know that Toys R Us specifically chose to file for bankruptcy in Richmond Virginia because of ‘favourable’ jurisdictional conditions, which include making it easier to walk away from union contracts and- wait for it – allowing its lawyers to be paid at a higher rate. The New York law firm representing TRU is charging a whopping $1745 an hour – apparently 25% higher than the going rate in retail bankruptcies. It’s not just the lawyers which stand to gain either; bankers and other professionals who helped to arrange the $3.1bn loan to keep the company operating in the short term stand to collect a cool $96m in fees. Do you see a pattern emerging here? You may say that it doesn’t matter, providing TRU is kept afloat, but tell that to US creditors, who are expected to receive settlements of around 25 cents to the dollar on what they were owed before bankruptcy protection was filed. They are the ones who are ultimately paying for these parasitical organisations.
Back here in the UK, Maplin has had its credit insurance revoked or cut back by three major insurers, while Sports Direct has come under fire for attempting to pay owner Mike Ashley’s brother John £11m in bonuses. Bearing in mind John actually left Sports Direct in 2015, it is not hard to see why the move has been widely criticised. Sadly, behaviour like this – and Toys R Us’ shenanigans – only serves to make investors and insurers nervous of retail as a whole, which is not a good thing in the current climate.
Because – let’s not beat around the bush – it ain’t easy out there. Speaking to people at the BTHA’s Houses of Parliament reception this week (more on that later), it is clear that the majority are now stoically resigned to the market ending up down this year. The only question remains – how far down? “A year like no other…unprecedented”; these are the kind of epithets now being bandied about. Double digit decline throughout October and November surely can’t be made up in December. Even Black Friday didn’t appear to move the dial hugely; looking at the deals on offer, they didn’t seem demonstrably different to the week before, or indeed this week. I suspect that retailers just didn’t have anywhere further to go in terms of discounting – and I’m not wholly convinced that further discounts would have made a massive difference anyway. Thank goodness the UK toy market has enjoyed two good years before 2017 – we’ll probably drop back a bit this year, but hopefully no more than a manageable couple of per cent.
The aforementioned BTHA parliamentary reception went really well – there was a very strong turnout from MPs and policy makers, and I am sure that it has helped to strengthen ties and make our voices heard in the corridors of Westminster. Credit to the BTHA for arranging a successful event.
There have been a few key staff changes at Worlds Apart, where Emily Mclennan has taken on the role of sales and marketing director and Tony White has been appointed UK sales director. Vance Withers will be moving on at the end of the year to set up his own training and development business, an area he is passionate about and in which he was a highly successful operator before joining Worlds Apart. We wish each of them all the best in their new endeavours.
I was very sad to hear that Playmobil commercial director Uffe Kloster passed away suddenly last weekend. Only 51, he was a thoroughly decent man and his passing has come as a great shock to everyone: our thoughts are with his family at this incredibly sad time.
Elsewhere, I am hearing rumours that a significant staff cull is about to get underway at Disney, with major cuts likely to affect the UK and other European operations. There have also been further rumours about the Disney takeover of Fox being back on, although several companies have been named as potential suitors, so who knows where it will end up.
Finally, Golden Bear’s Barry Hughes shared the following photo of an item he saw on a market stall in Hong Kong this week. I think we all know that the toy industry faces a huge challenge with counterfeits, which are often becoming increasingly sophisticated. Not this one. Fair enough, it has copied the characters and logo style perfectly. But something tells me that the name of the set – shown clearly at the bottom of the pack – gives this away as a line which would have struggled to get through the approval process. And, of course, some old friends sum up the reaction of the whole toy community to such a stunning misuse of google translate…