Care Bears boost Florida toy importer, but he needs  million right away

Care Bears boost Florida toy importer, but he needs $10 million right away

By Rajesh Kumar Singh

CHICAGO (Reuters) – Florida’s Basic Fun has seen a sharp pickup in business since coronavirus shutdowns started lifting in May, but the toy importer needs more cash to buy goods for the Christmas shopping season.

Overall sales for the year may be down just 10{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} from 2019’s $150 million, Chief Executive Jay Foreman predicts, half his May estimate and a remarkable improvement from April, when he saw a 30{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} decline for the year.

That’s because the toy importer’s sales to big retailers such as Walmart Inc <WMT.N>, Target Corp <TGT.N> and Inc <AMZN.O> are up over 20{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} year-on-year. Basic Fun is one of millions of U.S. small businesses facing an uncertain future during the coronavirus pandemic. Reuters is tracking the progress of several of these companies in months to come.

Toys are part of the “stay at home culture,” Foreman said. In particular, Care Bears, a retro product line of cuddly collectibles first popular in the 1980s, are “selling like crazy,” he said, and could mean a strong holiday season.

“In a crisis like this, it is a perfect product to hit the market,” he said.

There is one problem, though – Basic Fun needs $10 million, immediately, to order more bears and other products for the holidays from manufacturers.

Normally, Foreman would turn to banks, but his revolving credit facilities are based on trailing and projected earnings, and he can’t make solid projections. Meanwhile, about 20{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} of customers, like amusement parks, are still closed, and some customers are late paying Basic Fun.

The business uncertainty is making it difficult to decide how and when to bring back the 22 workers, who were furloughed in April.

A $2.4 million federal Payroll Protection Program loan helped Foreman pay salaries and rent, but did little to address his liquidity problem.

He was banking on the U.S. Federal Reserve’s mid-sized business lending program to tide over the company. But top banks are shunning the program, and the banks that are involved are mostly serving existing customers, Foreman said.

He is negotiating with vendors for extended payment terms and has asked banks for an asset-backed loan instead.


Even if he does get the capital, Foreman’s next concern is that his cash could be locked up in unshipped or unsold inventory if continued spread of the coronavirus in the United States results in fresh lockdowns.

“I probably spend 20{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} of my day thinking about COVID-19,” Foreman said, and another percentage of the day on finance related issues.

At least 32 states have reported record increases in cases in July and 16 states have reported a record increase in deaths during the month, according to a Reuters tally

Meanwhile, Texas and California are among the states that have reimposed some restrictions, and canceled events. The State Fair of Texas, the country’s largest, normally draws over two million visitors and sells Basic Fun merchandise. It has been postponed until 2021.

State fairs, carnivals and amusement parks normally account for one-fifth of Basic Fun’s sales.

Basic Fun needs more hands to manage the current orders, and to work on the product lines for next year. Any addition to the headcount, however, would inflate the salary bill and increase its capital needs.

“Everybody is concerned what happens if there is another lockdown in the fourth quarter,” Foreman said. “That is a big unknown.”

(Reporting by Rajesh Kumar Singh; Editing by Heather Timmons and Diane Craft)

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