Galoob

The Company's strategies in selecting and developing products are to focus primarily on lower priced, extendable product lines, to capitalize on current trends in the toy industry and popular culture, and to expand and diversify its product categories. Lewis Galoob Toys Inc. is among the ten largest toy companies in North America. This California-based company produces and distributes a variety of promotional toys and games including the Micro Machine line of toy vehicles and Sky Dancer dolls. Lewis Galoob Toys was founded in 1957 by Lewis and Barbara Galoob as a small distributor of toys and stationery; the company was incorporated in 1968. Galoob's first toy success was the reintroduction of a battery-powered Jolly Chimp that banged cymbals and nodded his head when activated. This classic toy, along with such stationery items as photo albums and calendars, brought in modest but steady annual sales in the low six figures during the 1960s and early 1970s. In 1970 company founder Lewis Galoob became too ill to continue as president, and his 21-year-old son, David, dropped out of the University of Southern California to take over the family business. David Galoob, whose previous business experience had consisted of selling waterbeds from the back of a truck, began to look for products with the potential to transform the small firm into a top toy producer. In partnership with his brother, Vice-President Robert Galoob, David aggressively pursued new product development, and thereby transformed the company into a $1 million business by 1976. Lewis Galoob Toy's first breakthrough product was introduced in 1976 when the company purchased the rights to an inexpensive line of radio-controlled, battery-operated cars and trucks. In the era of the "monster truck" rally and the revival of stunt driving, the toy vehicles charmed American kids, and the line of products became one of the company's mainstays for the next twenty years. By 1978 these sturdy little cars had generated sales of nearly $5 million. During the mid 1970s product licensing became an important factor in the toy business as producers sought new ways to predict and harness the desires of young consumers. Galoob made its first major entry into this market when the company bought the license to manufacture Smurf toys. These elfin creatures made popular by an animated television series served as Galoob's main entry into the girl's toy category during the 1970s and early 1980s. The late 1970s were a time of experimentation for Galoob, as management sought the direction that would allow the company to break into the top echelon of toy producers. "We kept trying to get a handle on the company," David Galoob told Forbes in a 1985 interview. After a number of unsuccessful products, including an electronic crap game called "Strobe-Dice," Galoob found its entry into the mainstream through the unlikely medium of a toy license for a television phenomenon called "Mr. T." A bejewelled strong man and his crime-fighting cohorts, the A team, Mr. T had inexplicably captured the imagination of kids around the world, and in 1983, thanks almost exclusively to Mr. T dolls, Galoob posted sales of $28 million. The Galoob brothers decided that Mr. T sales provided the capital they needed to become a major factor in the toy industry, and in 1984 they took the family business public with an IPO of 1.25 million shares. Faced with plummeting share prices, and with no hit product in the wings, Galoob management was quick to implement a long-term recovery plan with 1994 targeted as the earliest date by which the company could return to profitability. Crucial to this strategy was the development of core brands that could be extended and renewed each year and thereby provide a steady and reliable source of income. In addition, new product development costs were to be reduced in order to lower the break-even point for products, as well as to cushion the company from the effect of unsuccessful introduc