Toy industry execs look to bright side of holidays

Toy makers came out in full force to showcase their new product lines at a pre-holiday toy show and were optimistic about the key fourth quarter, despite the looming price of oil and an uncertain economy.

Giant toys loomed over booths at the Jacob Javits convention centre, adults tinkered with electronic games and a group of kids performed a complicated dance routine.

More than 50 companies - mostly toy manufacturers - attended the show, which included the release of the "Hot Dozen" toy list from event host Toy Wishes Magazine.

"The price of oil puts pressure on everything, from plastics to people's ability to travel," LeapFrog Enterprises Inc. President Jerry Perez told Reuters. "People will get to stores... and we think our products are worth the trip."

With the price of gasoline pinching wallets and the fallout from hurricanes Rita and Katrina still unclear, parents may be looking to get more for their money this year when stocking up on holiday toys.

Toys R Us President John Barbour said toys are one of the most inflation-proof parts of the marketplace and parents would rather give up dinner and a play than cut back on buying toys for their kids.

"When times are tough, parents economise more on themselves," Mr Barbour said.

But while executives were confident that holiday sales would not disappoint, toy sales so far this year are down five per cent from a the year-ago period, according to market researcher NPD Group, of Port Washington, New York.

"You can't deny that the economy might tighten budgets a little," said Anita Frazier, an analyst with NPD. "There are a lot of factors that challenge the industry. A lot of sales are being consolidated at mass retailers and consumers are concerned about making multiple shopping trips."

The US toy industry is struggling with years of intense price competition, slipping revenues, higher costs, store closings and high-profile bankruptcies.

Last year, US toy sales continued their slide, falling three per cent to $20.1 billion, NPD said.

Profits for toy makers and sellers are centred around the holiday season. Roughly 50 per cent of toy sales are rung up just in the fourth quarter.

Last year's holiday season was marked by intense price-cutting among toy sellers and the price war for 2005 has already started.

"We're expecting lots of price cutting on toys by retailers as a way to drive traffic," said Jay Foreman, president of Play Along, a division of Jakks Pacific. "We're happy our products are in an exciting category that can help contribute to a full shopping basket."