Where the Toys Aren't

Before you go, we thought you'd like these...
Before you go close icon

It's been a bad week to play games.

Shares of JAKKS Pacific shed roughly a third of their value today after the company posted disappointing quarterly results and nixed its quarterly dividend.

Net sales fell 27% to $106.2 million, and things get worse on the way down to the bottom line as it triggered $14.1 million in license minimum guarantee shortfalls and another $12.2 million in inventory impairment items.

It gets worse. As a result of deteriorating business conditions, JAKKS is suspending its dividend and exploring restructuring alternatives.

The scene wasn't as problematic at Mattel yesterday, but the world's largest toymaker still took a 7% hit on its heaviest trading volume in a year after serving up a crummy quarter itself.

Mattel's results were merely flat -- and it simply earned less than analysts were targeting instead of shocking the pros with a deficit -- but these gloomy reports can't be comforting for Hasbro investors.

Wall Street's holding out for flattish results out of Hasbro with revenue slipping 2% and earnings per share clocking in 3% higher, but if Mattel isn't selling Barbies and JAKKS Pacific isn't moving its licensed playthings, it wouldn't be a shock to see Hasbro call in sick come Monday.

LeapFrog reports two weeks from today. There won't be the same kind of correlation there that Hasbro has with Mattel and JAKKS Pacific. It makes electronic learning toys, and weakness for the makers of traditional games doesn't necessarily mean that parents aren't buying more LeapFrog game cartridges or learning tablets.

However, if the bad news at Mattel and JAKKS Pacific is that parents aren't splurging as much on their children despite the seemingly improving economy, it may be hard to remain confidence in any of the industry's players.

Don't play games with your retirement
The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "
3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Where the Toys Aren't originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Hasbro, LeapFrog Enterprises, and Mattel. The Motley Fool owns shares of Hasbro and LeapFrog Enterprises. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

People are Reading