Toy maker MGA Entertainment has warned that the coronavirus outbreak has significantly disrupted the production of its brands in China, including LOL Surprise toys.
The manufacturer pointed out that the current delays in production and shipments caused by the coronavirus outbreak could could mean a short supply of LOL Surprise toys for the fall and holiday shopping seasons.
Isaac Larian, founder and chief executive officer (CEO) of the family-owned Los Angeles-based company MGA Entertainment, said: "It's a big mess and very frustrating."
Larian mentioned that factories in China typically close for the three or so weeks of Lunar New Year and start up production lines again in early February but the government decided to extend the annual holiday, keeping factories closed and workers at home longer, as part of initiatives to address the coronavirus outbreak.
He pointed out: "All toy companies begin production for fall products right after the Chinese New Year. These are toys for Christmas. We have now already lost at least three weeks in our production cycle. I just got a call that some of our factories may not open until March."
"You can't extend Christmas. It's always on December 25. So, yes, the availability of our goods in a timely manner will be severely affected," Larian added.
Over 80% of MGA's toy production is conducted in China, including LOL Surprise. The company has manufacturing deals with 50 factories in China, which accounts for over 80% of all global toy production.
According to Larian, the LOL Surprise brand now comprise 45% of the firm's total global revenue. The toy brand includes accessories and licensed products. Last year, it posted a total global retail sales of $3.5 billion for the toys alone.
Larian said: "The reality for us is that a two-month delay in production for LOL is pretty significant. We now have to manage how we reallocate the supply of our toys not just to customers in the United States but worldwide."
