U.S. toymakers, who obsess about the gift-giving season 365 days a year, are not letting higher gas prices, rising interest rates and the possibility of a slowing housing market cloud their view of the upcoming holiday season.
"We always believe going into the holiday season that the season will be a good season," said Neil Friedman, president of Mattel Brands, speaking at the Reuters Consumer and Retail Summit in New York this week.
"Will there be bumps along the way? There always are. But if you have great product, the consumer will find it."
U.S. toymakers have been facing a prolonged sales slump as children are lured to electronic products at younger and younger ages. Toymakers are also being hurt by higher commodity costs, which have pressured margins and led to price increases.
This holiday season, when toymakers look to earn a large portion of their yearly profit, they could be trying to sell toys to consumers who have just spent the year paying $3 a gallon or more for gasoline, much more than they were paying a year or so earlier.
But the uncertain economic outlook has not stopped toy companies from designing high-priced gadgets that they expect to be hot sellers for the holidays.
Hasbro Inc., the No. 2 U.S. toymaker behind Mattel, is introducing Butterscotch, a life-sized miniature pony that can move its head, open its eyes, and interact with a child. Butterscotch will sell for roughly $300.
"There is clearly always an opportunity to sell great, innovative product," said Brian Goldner, Hasbro chief operating officer. "Toys are relatively a good value compared to a lot of other product categories."
But Isaac Larian, CEO of privately held MGA Entertainment, which makes the edgy line of Bratz fashion dolls, said consumers are already forgoing extra toy purchases as they face the soaring cost of filling up a gas tank.
Larian said MGA designed a Bratz dollhouse, complete with a disco and working fountain that will sell for roughly $100. Larian said MGA expects to sell 250,000 houses, but if the economic environment was better, it would likely sell 350,000 to 400,000 pieces.
But Goldner said while Hasbro may be offering high-tech and high-priced toys, the majority of its toys and games can fit into tight budgets.
"About 75 percent of our business still sells for $20 or under," he said.
"Parents still want to make sure kids have great birthday, Parents still want to make sure their kids have great holidays. They don't want their kids to go without toys."