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Toy Maker Lionel Emerges
From Bankruptcy With Broader Plans

By PATRICK FITZGERALD
May 5, 2008; Page B4



Lionel LLC emerged from bankruptcy-court protection last week, ending a three-and-half-year restructuring and bitter fight with a rival model-train company. Now, the 108-year-old toy maker is poised to move out of the hobby shop and into the broader pop-culture marketplace.



One of Lionel’s model locomotives.



Chief Executive Gerald Calabrese, a former Marvel Comics executive who shepherded Lionel through bankruptcy, said in an interview that he sees the new Lionel as an entertainment company and not just a toy maker.



“The way people buy and sell things has changed dramatically since 1900,” said Mr. Calabrese. “We’re not the distribution and sales mechanism anymore, we’re the intellectual property. And that’s the major change in the outlook of this company.”



Breaking into the broader toy market is key to Lionel’s growth, said Mr. Calabrese. During the company’s stint under bankruptcy protection, sales for Lionel starter sets – kid-friendly systems that range in price from $129 to $300 -
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Breaking into the broader toy market is key to Lionel’s growth, said Mr. Calabrese. During the company’s stint under bankruptcy protection, sales for Lionel starter sets – kid-friendly systems that range in price from $129 to $300 – more than doubled. The company sold some 200,000 sets last year with much of that growth coming from sales at department stores and big-box retailers.

“We had virtually no sales at outlets like Target and Macy’s and FAO Schwarz when the bankruptcy started,” said Mr. Calabrese. Developing new products that appeal to children and getting them on the shelves at big retail outlets is only part of what Mr. Calabrese, who worked on Marvel’s television programming in the 1990s, calls the pop-cultural segment of the toy market. He says that in today’s marketplace, movies and television are the key drivers to sales.

I agree with Mr. Calabrese’s strategy of offering Lionel starter sets at big box stores. The local LHS doesn’t
generate the same consumer traffic and didn’t most us of see our first Lionel display at Sears or other
BIG department store.

Mark