Hit toys like Bakugan key for industry

NEW YORK — At the hectic Toys "R" Us in Times Square, displays of Incredible Hulk and Star Wars toys dwarf a shelf displaying Spin Master Ltd.'s Bakugan Battle Brawlers. But the Bakugan products are sparse, while other shelves remain fully stocked.

Indecipherable to adults and irresistible to kids — boys at least — Bakugan Battle Brawlers and related merchandise have become an out-of-nowhere hit this shopping season.

"Bakugan qualifies as the hardest-to-find toy of the holiday season," said Toys "R" Us spokeswoman Kathleen Waugh. "The minute it is restocked on store shelves it vaporizes."

Toymakers often rely on holiday hits like Bakugan because up to half their annual sales come during the last three months of the year. Even though adults are focusing their spending on children during this holiday season, analysts predict toy sales will be flat or even fall 3 percent from the $10.4 billion market research firm NPD Group said toy shoppers spent during last year's final three months.

Retailers and industry experts say the most expensive items are selling slowest.

"We're cautious on high-ticket items this holiday period," said Drew Crum, a Stifel Nicolaus analyst.

An exception is Spike the Ultra Dinosaur, a remote-control dinosaur from Mattel Inc.'s Fisher Price unit, according to Jim Silver, a toy analyst with Timetoplaymag.com. It retails for $140 at Toys "R" Us and $130 at Wal-Mart Stores Inc.

"I thought it would do OK, but it's been a tremendous success," he said. "You walk into retailers and see kids watching the display and falling in love with it."

Among other classic brands, Hasbro's Nerf "is on fire," BMO Capital Markets analyst Gerrick Johnson said in a note to clients; most popular are Nerf guns, which range in price from about $20 to $85, he said.

There was debate over how well Mattel's much hyped Elmo Live! toy is selling. The latest iteration of interactive Elmo dolls that first sparked a craze when Tickle Me Elmo debuted in 1996, it can sit, stand and cross its legs, and its mouth and head move. It also sings and tells jokes.

Spokeswoman Kathleen Waugh at Toys "R" Us Inc. said the toy is selling steadily. But Johnson disagreed.

"We keep getting told Elmo Live! is selling," he said. "We keep looking for those sales but just don't see them."

For Toronto-based Spin Master, which launched Bakugan in Japan in 2006, Canada last year and the U.S. this year, ranking among holiday hits is a relief. Around this time last year, the company was contending with the recall of its popular holiday gift, Aqua Dots.