Posted October 12, 2018 17:15:56 It’s the end of the line for toy maker Toys ‘R’ Us as its construction stock plunges.
The retail giant is cutting costs to keep up with demand for its most popular line of toys.
It’s a big blow for the toy industry as it faces an industry slowdown and is facing pressure from rivals to improve its product quality.
Toys ‘R’, like its rivals, has faced criticism from investors for years over its factory conditions and lack of supply.
Talks have been going on for more than a year to find new factories to build the latest toys, but the US-based company says it is now on track to make its toys more affordable.
But it is putting pressure on other toy makers.
A report last week by financial services firm FBR Capital Markets showed Toys ‘ R Us’ construction stocks had slipped to the lowest level since May.
And the company has been forced to cut its workforce to try to stay competitive.
The company says there are no plans to cut staffing levels for the next 12 months.
But analysts say it is the right decision.
Toby Thompson, chief investment officer at investment bank J.P. Morgan, said the toy maker’s problems had been exacerbated by its failure to deliver on its promise to build and ship toys at the same time.
“Toys R Us is the last remaining company on the planet that can’t deliver a product at the speed it promised,” Mr Thompson said.
“So the stock is going down, but not in the way you would expect.”
The retailer says it will cut up to 20 per cent of its workforce from its workforce by the end in 2018, to bring down costs.
Tricks ‘ R’ Us will not have to lay off workers at the beginning of 2019.