The firm has downgraded its earnings forecast from $43 million to between $28 million and $31 million, before interest, tax and amortisation.
It said the over-ordering of stock would lower its full-year earnings by up to 35 per cent.
Tony Oats, the firms MD, said weaker sales and aggressive pricing by major retail chains such as Target, Big W, Toys R Us, Myer and David Jones were also attributed to the downgrade, along with changing consumer trends making some product lines un profitable.
The firm has exclusive rights to distribute brands such as Bratz dolls. Other brands include Power Rangers and LeapFrog. ??It said while a strategic review of the business would be undertaken, none of the divisions would be put up for sale.