DOWNTOWN : Slumping Sales No Joy for Toy Town

Toy Town merchants said this has been their worst holiday season ever, with toy sale revenue down more than 20% from last year.

Toy sellers blamed the downturn on a variety of factors, including restrictions on their trade with Mexico, Proposition 187 and the troubled California economy.

In a neighborhood better known for its missions and homeless encampments, more than 400 wholesalers and importers of inexpensive toys from Asia sprung out of nowhere in the late 1980s. At its peak, Toy Town reported annual sales at $1 billion.

Used to boom times, merchants in the sprawling toy market, bounded roughly by 3rd, San Pedro, 6th and Los Angeles streets, endured their slowest season yet.

Jeff Wu, who has operated IMC Toys on 4th Street for nine years, said his wholesale revenues were down 30% to 40%.

“This is my worst Christmas ever,” Wu said.

Wu relies on exports of his China-made toys to Mexico for almost half of his wholesale revenue. After Mexico imposed a high duty on Chinese products earlier this year he lost up to $4 million in sales.

In the last month the Mexican government relaxed the tariff for non-competing Chinese products. But Wu hasn’t gotten much relief because many of his toys are still deemed competitive with Mexican goods.

While many Toy Town customers run small businesses in L.A.’s ethnic neighborhoods or sell their toys from booths at Southern California swap meets, exports to Mexico and South America account for 30% to 50% of the district’s wholesale business, said Charles Woo, owner of Megatoys and a pioneer Toy Town entrepreneur.

Retail sales, which account for about 30% of the area’s revenue, also slumped, Woo said.

Kim Hau, proprietor of 88 Toys, in part blames Proposition 187, which would bar illegal immigrants from receiving government health and education services if it survives court challenges.

Hau believes his Latino customers, who account for a large percentage of Toy Town’s retail sales,

may be devoting their resources to fighting the measure’s enactment or saving their money in case they need to assist family or friends.

Woo said: “Everyone has a different theory for the slowdown,” adding that he believes the weak California economy is a factor.

Woo estimated that sales were down 20% across the board in Toy Town. Last year a surge in sales two weeks before Christmas saved the season, he said. Although sales picked up last week, Woo said it probably came too late to salvage this season.

Woo says the dip as temporary, adding that he believes the Mexican markets will reopen. He attributes much of the groaning to merchants who are accustomed to seeing their robust businesses expand instead of contracting.

“This was not a growth year,” he said, but businesses that provide good service and good products at reasonable prices will do fine.

“Gone are the times when you can just open up a toy wholesaler and have a line outside the door.”