For Ubiquitous Beanie Babies, a Surprise Ending

Long-suffering fans of Beanie Babies stuffed animals were grieving for real Friday.

Beanie maker Ty Inc. announced on its Web site that it will cease production of the toys Dec. 31. The company had said previously that the Beanies would be “retired.”

“There will be no new ones as of Dec. 31,” said Ty spokeswoman Anne Nickels. “They will all retire.”

That seemed to seal the fate of the toys, a demise that some industry watchers and hand-wringing collectors had not expected.

“Goodbye, Beanies,” one Web letter lamented. “I’ll miss you!”

Although the once billion-dollar-a-year-plus Beanie market has cooled off in recent years as children turn to Pokemon and other toys, the 6-year-old line was still bringing in hundreds of millions of dollars each year, said Sean McGowan, a toy industry analyst.

Michael Kanzler, Ty’s chief financial officer, has said the toy maker’s overall net income for 1998 was more than $700 million.

The privately held company, run by marketing master Ty Warner, had turned the stuffed toys into hot collectibles by limiting supply. Without warning, the company would routinely retire certain Beanie characters and then stop making them altogether--driving an exploding secondary market into the stratosphere as desperate parents and adult collectors rushed to pay hundreds of dollars for a soon-to-be-gone Beanie.

Many people assumed at first that the “retirement” of the toy line announced last September was merely an attempt to revive interest in a declining product.

“It looks today like they really are finished, which is surprising,” said analyst McGowan, of Gerard Klauer Mattison in New York. “A big part of my head says no, this is not the way the world works. But this guy [Warner] has done things outside the rule book all along, so who knows?”

Asked if the toys might ever be revived, Nickels said, “I suppose anything is possible, but I have no idea at this point.”

Ty bought no advertising, sold no licenses, aggressively enforced a no-markdown rule and refused to sell any Beanie Babies or related products to the biggest toy sellers in the country, including Toys R Us and Wal-Mart.

The toys drove traffic into small, individually owned stores in an era of Wal-Mart dominance and belied the notion that children preferred computer and electronic games to simple toys.

McGowan said that the toy line’s demise is not likely to have a severe impact on these retailers. Many have already adjusted to falling Beanie sales and have always been less dependent on the inexpensive toys for holiday revenue.

Beanies accounted for 15% to 20% of sales last year for toy seller Noodle Kidoodle but only 4% or 5% of sales in this holiday shopping season as buyers have turned to higher-priced toys, McGowan said.

Some collectors who had made a tidy profit on Beanies have already moved on.

Leonard Tannenbaum, president of Collectingnation.com, which operates Web auction sites for collectibles, said that the Pokemon phenomenon is all the rage.

“We have a collector base which just loves collecting, and they are going to collect something,” he said.