The toy sector had a jolt on Wednesday when Target ( TGT ) execs said on the retailer's earnings conference call that it saw a meaningful deceleration in the toy category in Q3.
"This is a trend we will continue to monitor closely as we move throughout the holiday season," noted Target Chief Growth Officer Christina Hennington during the call.
The toy category was a focus of Amazon's Prime Day event in October, but recent data from trade group ICSC showed discounts on toys reached 15% during the month. That could be an indication inventory levels are too high, which in turn would cut down on new orders for manufacturers. Retailers stocked up on toys earlier this year to avoid any supply chain wildcards, but the worsened economy has now created some concerns on overall toy demand over the next few months.
Toy story: Hasbro ( NASDAQ: HAS ) fell 6.06% in afternoon trading on Wendesday, while Mattel ( MAT ) was down 3.03% . Spin Master Corp. ( OTCPK:SNMSF ) showed a 4.73% decline and Funko ( FNKO ) peeled off 5.23% .
Earlier in the week, Bank of America turned negative on Hasbro ( HAS ) with a double downgrade after conducting a deep dive into the Magic: The Gathering business.
For further details see:
Toy stocks slump after Target warns holiday season demand could disappoint