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A Real Toy Story

Back To Basics

Between 1992 and 1993, sales at Russ Berrie and Co. dropped more than $165 million--from $444 million to $279 million. And it wasn't just lost sales that hurt: The company had also lost momentum.

Berrie was understandably disappointed with the course of events, but he wasn't defeated. This is where experience helped. For one thing, even in the headiest moments of troll fever, Berrie had expanded the company conservatively. "We added a number of salespeople and a few people in shipping and administration, but we had been able to control growth without overburdening the company," Berrie says. "Again, the fact that we don't own any factories helped."

Furthermore, Berrie had been through enough product cycles in his career to know that the next necessary step was development. "We simply started changing the line," he says. "We saw a trend in home d├ęcor accessories [and jumped on it]. We developed our line of `Bears From the Past.' They're stuffed bears that have a nostalgic look. We expanded our baby line. We expanded our holiday offerings. We made more themed products. We came out with new products toward the end of 1994, and by 1995 we had a good year," with sales of more than $348 million.

What did Berrie learn from the troll episode? Certainly, that meteoric spikes in sales aren't all bad: Both revenues and profits hit record levels in 1992. But knowing the fundamentals of your business and having the good sense to return to them in times of crisis is the surest recipe for longevity.

"It isn't that complicated," says Berrie. "You need to be able to take the risk, to take your best shot. You run with the winners and bail out on the losers."

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This article was originally published in the September 1997 print edition of Entrepreneur with the headline: A Real Toy Story.

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