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Hobby distribution dire for Toys R Us and Barnes & Noble in 2013

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The jury is still out as to whether or not the holiday season was a success for hobby retailers, but things are looking grim for two major hobby distribution channels: Toys R Us and Barnes & Noble.

America’s Research Group and Inmar’s retail report, based on the research concluded Sunday, December 22, 2013, revealed the retail Winners and Losers of 2013:

Of the 24 retailers surveyed only three retained 70% or more of their customer base, with Walmart topping the list at 88.1% followed closely by Dollar Tree at 80.4% , and Target at 72.1%. The bottom five retailers on this year’s Losers list are Barnes & Noble (43.9%), Costco, (49.4%), Marshalls (50%), Toys R Us (53.1%) and Lowe’s (56%).

The bad news for Toys R Us continued with its third quarter results:

Comparable store net sales were down 5.2% in the Domestic segment primarily resulting from decreases in the learning, juvenile (including baby) and core toy categories, and the impact of the shifted timing in the release of this year’s Big Book promotional catalog versus the prior year...Net sales were $2.5 billion, a decrease of $118 million or 4.5% versus the prior year. Gross margin dollars were $896 million, compared to $967 million for the prior year, a decrease of $71 million...Adjusted EBITDA1 was negative $37 million, compared to $31 million in the prior year, a decline of $68 million...Operating loss was $140 million, compared to an operating loss of $75 million in the prior year, an increase of $65 million...Net loss was $605 million, compared to a net loss of $105 million in the prior year primarily due to an increase in income tax expense of $379 million.

The top five retailers as identified by ARG and Inmar indicate that to distribute hobby games to major distribution brick-and-mortar channels, Wal-Mart (88%) and Target (72.1%) are best bets. Judging from the list, Steve Jackson Games is on the right track with its distribution strategy. This is not without risks of course, like when Target sold Pandemic earlier than its release date.

It seems that at the rate these two companies are going, both Toys R Us and Barnes & Noble will soon be a footnote when it comes to buying hobby games. For gamers looking for deals, it's worth keeping an eye on the companies as they may soon sell out their inventory at a discount.

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