The Los Angeles Times from Los Angeles, California • Page 385

BUSINESS SHOPPERS: The Crucial Season Continued from 3 stuffed dinosaurs and other novelties tied to the film. THQ Inc. I BORIS YARO Los Angeles Times j.JAtU Jack Friedman, THQ president with Captain Hook on his shoulder, and Brian J. Farrell, chief operating officer, above, are optimistic on sales season, as is I Dakin Chairman Robert G. Solomon, right.

THQ Inc. I products are included in the Toys Us games aisle. rolandootero LosAngeies Times I RICHARD DERK Los Angeles Times Christmas means toy stores crowded with video-game players and software. In the game-cartridge portion, particularly, the business is fiercely competitive with dozens of different titles. So THQ tries to increase its small slice of the pie by selling games that kids can easily recognize.

In October, for instance, the company unveiled a game based on the film "Home Alone 2: Lost In New York," knowing full well that the game would be in stores not only as Christmas arrived but also as the movie was reaching theaters nationwide. "We rely on the fact that" the film's main character "and 'Home Alone' are easily recognizable by our target audience, kids," said Brian J. Farrell, THQ's chief operating officer. Also in October, THQ took a page from Dakin's book and brought out a game based on "The Ren Stimpy Show" to be used in the popular hand-held video-game player Gameboy, made by industry leader Nintendo Co. of Japan.

THQ also introduced board games based on "Home Alone 2: Lost In New York." And as part of its earlier announced plans to develop software for players made by Sega Enterprises Ltd. of Japan, Nintendo's main rival in game players, THQ this month introduced a Sega game called "The Great Waldo Search," based on the popular series of kids' books. All of which is designed to give THQ a big bang this Christmas. Farrell said more than half of the company's 1992 sales and earnings could come just in this quarter, although he called this "an unusual year" because so many of its latest products arrived along with the Christmas season. THQ also is hoping that Christmas shoppers help bolster the company's flat earnings of late.

In the nine months ended Sept. 30, THQ's net income was $1.45 million, nearly unchanged from $1.5 million a year earlier, even though its sales more than doubled to $23.9 million. The company is optimistic because sales of the new generation of game players which rely on 16-bit computer chips that enable them to play more sophisticated games are rising sharply. About 12 million 16-bit players will be sold this year, up from just 3 million a year ago, when the machines had just been introduced, estimated John G. Taylor, a toy analyst with the investment firm L.H.

Alton Co. in San Francisco. Sales of players and games this year "are doing much better than expected," he said. But THQ doesn't count on Christmas for all of its growth. The first quarter of each year also is important, Farrell said, because "people who got a Nintendo player under the tree are buying games" after New Year's Day.

The Right Start Inc. items for kids up to age 4. The company theorized that during the holidays, parents of young children "were spending more on gifts for others and figured others would buy gifts for their babies," Fridstein said. But that theory evaporated during the past two years as Right Start, which is 64 -owned by American Recreation Centers Inc. of Sacramento, looked for ways to enhance its growth.

While the company mainly sells upscale items that help parents care for their kids (strollers, car seats, and the like) and enhance the children's learning skills (mobiles, art supplies and similar items), it began "to focus more on toys, adding Christmas gift pages and repositioning the cover of the catalogue," Fridstein said. Result: Right Start currently markets a Holiday 1992 catalogue whose cover features a sleeping infant holding a "Reindeer Rattle," and whose best sellers include an audio tape of Christmas carols. But those changes alone don't allow Right Start to relax. "Last year we had a fairly poor Christmas," Fridstein said. "It was our biggest mailing in history, 3.2 million catalogues, and it was a mistake," he said, explaining that the additional production and mailing costs did not translate into a commensurate sales boost.

In its fiscal year ended May 27, Right Start's profit tumbled 34 from the prior year, to $820,000, despite a 26 gain in revenue to $27.4 million. "This year, we sent 2.6 million, and we'll end up with more sales on fewer catalogues," Fridstein said. "The combination of circulation changes" that is, better directing catalogues to consumers with strong track records of catalogue purchases "some merchandising enhancements and the economy being healthier have all led us to our best Christmas in history." Whether Right Start's profitability picks up as well is an open question. In the first half of its current fiscal year, Right Start's profit drooped by 28 from a year earlier, to $494,000, even though its six-month revenue jumped 32, to $19.8 million, the company announced earlier this month. Price-cutting and higher shipping costs helped erode earnings.

Until the 1990s, the Christmas season was "unimportant to us," said Right Start President Stanley M. Fridstein, who co-founded the catalogue company with chief executive Lenny M. Targon in 1985 to sell TUESDAY, DECEMBER 22, 1992 PAGE 9 LOS ANGELES TIMES.