Re:creation enters administration: “Business became unmanageable in extraordinary year”

Supplier issues compounded by a ‘softness in the market’ in what has been a particularly tough year of trading has forced the hand of the global toy distributor, Re:creation who entered into administration last Friday.

Speaking with ToyNews, owner, Michael Lehrter, stated that it was a succession of hurdles thrown at the company over the course of what has been a difficult year for many in the toy industry to negotiate, that ultimately forced its hand.

“I don’t think it will come as any surprise to a lot of players that it’s very tough out there,” Lehrter told ToyNews. “We started with a lot of optimism and had a great Toy Fair where we launched half a dozen or more new products. We had a good response from major retailers and we sold a number of new products through retailers we hadn’t worked with in a while.”

However, Re:Creation found itself battling a number elements, Lehrter has explained, including suppliers running late in bringing out new products and missing key selling periods.

“On top of that, softness and product life cycle hit us,” said Lehrter. “Some of our mainstream ranges, with the market being as tough as it is this year, just didn’t land. Any normal year, you can survive two or three of these set-backs, and if the market is holding steady, that helps. 

“But six or eight of them in one year – and you have a dollar-pound exchange rate that is making it very difficult to be profitable, as well as general softness in the market – and you end up in frankly this horrible situation we are now in.”

Last month’s NPD data showed a 15 per cent decline in toy sales year on year, an “extraordinary” decline that Lehrter has declared “the worst I’ve seen in eight years since managing” Re:creation.

“There has been less acceptance of new products this year,” continued Lehrter. “Retailers have been struggling and not willing to take risks. If LOL is working for them, they stick with that, or try something for three weeks and if it’s not exceptional, they will kick it out.”

Re:creation fund itself in trouble earlier this year, a hangover, Lehrter has suggested, from delayed payments ‘from major retailers,’ that saw business at the small, and privately owned company – funded ‘largely’ by Lehrter himself – become unmanageable without financial aid from the bank.

Under control of financiers, KPMG was hired in order to find suitors for the business. The sale of the company to a selection of private equity companies fell through in recent months, however, leading Re:creation to its ultimate decision to enter administration.

“Ultimately as CEO, I am responsible for the company,” said Lehrter. “But when you are getting hit in all directions from a variety of different factors, that are largely out of your control, you just can’t adjust your cost structure and your fundamental business that dramatically. This has been an extraordinary year that has fuelled the situation we are in.”

Lehrter concluded that work was now on to find “homes for the strong brands” Re:creation had on the portfolio, including the outdoor Razor brand.

About Robert Hutchins

Robert Hutchins is the editor of and ToyNews. Hutchins has worked his way up from Staff Writer to the position of Editor across the two titles, having spent almost eight years with both ToyNews and, and what now seems like a lifetime surrounded by toys. You can contact him by emailing or calling him on 0203 143 8780 You can even follow him on Twitter @RobGHutchins if ranting is your thing...

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