It might not be shaping up to be a very merry Christmas for Character Group (CCT). The toy designer and distributor’s third-largest customer, Toys R Us, filed for bankruptcy protection in North America and is looking to restructure its $5bn (£3.7bn) debt. Character Group said it does not yet know how much this will affect the business or what impact it will have on the upcoming holiday season, as Toys R Us represents around 10 per cent of group revenue. The shares fell around 9 per cent on the day of the announcement.
Yet excluding the potential knock-on effect from Toys R Us, Character Group appears to be in good shape. Earlier this month it won the master toy distributor contract for the Pokémon brand and in July a three-year extension was granted to its Teletubbies master toy licence. The business is heavily exposed to sterling, but management is hoping to compensate with more cost-effective packaging and price negotiations with suppliers.
