By Parija Kavilanz, CNN Business
Now you can add toys to the growing list of products that global supply chain issues have made more expensive to produce.
Toy maker Mattel whose brands include Barbie, Hot Wheels, Fisher-Price and American Girl, said in a earnings conference call on Tuesday, it increases prices in the second half of the year as the holiday shopping season approaches, which is the biggest selling time of the year for the toy industry.
Mattel CEO Ynon Kreiz said on the call that the company is “managing the challenges of the global supply chain” which include higher production and shipping costs, and chooses to compensate for them by putting in place of higher prices for its toys in several of its key markets.
It is not clear whether the stores, which ultimately sell Mattel’s products to consumers, are themselves going pass these increases on to buyers.
The post-pandemic recovery has been hampered by a confluence of supply chain challenges even as consumer demand rebounded. Businesses at all levels are not only struggling to meet increased demand by having enough inventory, but they are also facing a shortage of shipping containers and bottlenecks in ports, which increased the cost of transporting products around the world.
“We still expect supply chain challenges to continue for the remainder of the year,” Kreiz said. “Of course, there could still be unforeseen challenges in the supply chain, and it’s hard to say what the future holds. “
Mattel’s comments follow rival Hasbro saying it will also increase prices later in the year to “offset the rise in the cost of freight and commodities that we continue to see across the board. business”.
Hasbro, whose brands include Transformers, My Little Pony and Nerf, told analysts in its earnings call Monday that it is also trying to overcome expected port congestion and ongoing shipping constraints that will continue into the second half of the year. .
Hasbro CEO Brian Goldner said the toy maker’s decision to raise prices is in line with “so many categories of consumer products in all areas where we are seeing a rollback in [consumer] demand ”which opposes supply chain problems.
Parents hoping to grab this year’s most popular toys may need to act quickly when they become available due to the smaller supply. Panjiva, the supply chain research unit of S&P Global Market Intelligence, told a media webinar on Monday that the impact of supply chain congestion is likely to impact the holiday season. , causing a shortage of trendy items and making hot toys “harder to come by.”
Jim Silver, toy industry analyst and CEO of Toys, Tots, Pets & More, an industry review website, agreed that restocking could become an issue.
“When it comes to hot toys, supply chain issues will slow down the replenishment system,” he said. “So if some toys sell out quickly, it will take longer to replace that inventory. That being said, many holiday toys were made months ago, already shipped, and are either here or on their way. “
Mattel, citing strong consumer demand, reported sales in its second quarter ended June 30, up 40% from the same period a year ago, boosted by the continued popularity of its toy brands Barbie, American Girl and Hot Wheels. Hasbro’s sales were up 54% in the second quarter ended June 27, compared to the same period a year ago.
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