Retailers that helped turn Bratz into a sensation when the pouty-lipped dolls first appeared in 2001 are giving the line a chillier reception for this holiday season.Target Corp. and Wal-Mart Stores Inc. have both reduced stocks and shelf space for Bratz, with Target cutting its Bratz space by about 50%, according to the retailer. A key reason for the waning retailer enthusiasm is that Bratz sales have been slipping. Analysts expect Bratz, made by closely held MGA Entertainment Inc. of Van Nuys, Calif., to generate about $300 million in revenue this year, down from an estimated $400 million last year.
Bratz creators tried to design dolls that would evolve with girls' tastes.
Some attribute the dolls' recent dip to the inevitable come-down that has hit even the most sought-after toys of years past, from Tickle-Me Elmo to the Cabbage Patch Kids. "Nothing stays hot forever," says Gerrick Johnson, a toy industry analyst at BMO Capital Markets.
But there's another reason for Bratz's decline. MGA was distracted this year as it battled a lawsuit from Mattel Inc., which claimed MGA stole the idea for the dolls from the toy giant. In July, a federal jury sided with Mattel and later awarded the company as much as $100 million in damages. Mattel is now asking a federal judge to evaluate MGA's continued ownership of the brand. MGA has agreed to consider settlement talks with Mattel before the judge approves the award, though it hasn't ruled out an appeal.
Bratz's creators had set out to design dolls that would evolve with girls' fickle tastes rather than be trampled by them. With their big eyes and skimpy outfits, the multiethnic dolls were supposed to be able to ditch trends quickly when they faded and jump on new ones. Fresh lines were rolled out each season, just like in the fashion industry.
MGA Chief Executive Isaac Larian concedes that Bratz lost their edgy looks as his company fought the allegations by Mattel, maker of rival Barbie. The change struck him as he and other employees were reviewing the current fall line earlier this year. "We said, 'Oh my God, we lost focus on what our brand was,'" Mr. Larian said. The company had standardized some of the dolls' accessories and features, reducing the individuality that had long been their appeal. "They had become the same doll with different names," he said.
For example, for this fall's line, some Bratz dolls were set to carry lookalike miniature handbags made of molded plastic. Mr. Larian says the company was able to change some of them to sewn cloth bags whose designs vary. And the company added a number of embroidery patterns to jeans that originally had been set to be plain. But other alterations won't be seen until next spring's line.
Though these details are small, Mr. Larian said recent market research indicated girls were noticing. "What attracted them to these dolls was the clothing that was different from one doll to another," he said.
Mr. Larian insisted his dolls still remain popular. Still, retailers have taken note of Bratz's problems. A Target spokesman said the reductions had been influenced by recent Bratz sales. A similar trend is afoot at Wal-Mart, the world's largest toy seller by sales, where the declines in shelf space for Bratz are 15% to 30% in some stores, according to recent research by Needham & Co., a New York investment bank.
On a recent afternoon at a Toys "R" Us store in Los Angeles, shoppers milled past dozens of items that the store had put on clearance. A Bratz hand-held game had been slashed to $6.98 from $14.99. Bratz dolls themselves also were on sale, though the original price tags had fallen off. Such markdowns have become common nationwide, analysts say, and Needham has noted double-digit shelf-space declines for Bratz at many Toys "R" Us stores.
Other dolls are facing retail problems as well, as children gravitate toward expensive consumer electronics. Shelf space for Barbie has been flat or declining at many retailers, according to Needham, and some other girls toys, such as Polly Pocket and My Little Pony, have seen their presence shrink. For the 12-month period ended July 2008, U.S. sales of fashion dolls and accessories slid 4% to $1.7 billion from the year before, according to NPD Group Inc., a market-research company.
Meanwhile, MGA faces stiffening competition from rival dolls, including toys based on characters from Walt Disney Co.'s "High School Musical" and "Hannah Montana" TV shows. These dolls, made by Mattel and Jakks Pacific Inc. of Malibu, Calif., have made triple-digit strides in shelf space at some major retailers, according to Needham. The brands are also supported by the TV shows and vast media campaigns whose halo effect extends to related consumer products.
Studios, often armed with consumer-products divisions of their own, generally take part in retail deals and offer some negotiating clout to smaller toymakers. "It's going to be potentially harmful for [MGA] not to have a partner," said Reyne Rice, who analyzes trends for the Toy Industry Association.
Last year, MGA reached out to Lions Gate Entertainment Corp. to release a live-action feature film called "Bratz." But the movie, which featured girls with the same names as the doll characters, had a poor showing at the box office, bringing in roughly $10 million domestically, according to Box Office Mojo LLC, which tracks ticket sales. "The movie was a disappointment and personally I believe it had a negative effect on Bratz," Mr. Larian said. He now plans to focus on Bratz-themed animated movies released on cable TV to drum up attention for the brand.
By: Nicholas Casey
Wall Street Journal; September 22, 2008
