Scooter wave slides across America

NEW YORK (Reuters) -- Cabbage Patch Kids. Koosh balls. Rubik's Cubes. Garbage Pail Kids. Pogo balls. Slap bracelets. Teenage Mutant Ninja Turtles.

Most American kids were hungry for these "in" items when they first hit the market, only to forget about the trendy toys soon after their parents shelled out the cash for them.

Now the main question for Carlton Calvin and his popular scooter company, Razor USA, is whether people will still be familiar with the name Razor this time next year.

"For the kids that don't have it, scooters are on their wish list this season," WR Hambrecht & Co. analyst Kristine Koerber said. "Then, after the holiday season, we'll see a tapering off in sales."

Calvin, founder and president of Razor USA, told Reuters he hopes the firm's name will be in the forefront of American minds well beyond Christmas 2000, but the toy business veteran who has marketed "Pogs," "Scorpion Yo-Yo's" and "Finger Boards" acknowledged the fickle nature of toys' popularity. On a tour of New York to meet with major retailers selling Razor scooters, he conceded that the scooter craze could be "cyclical" as well.

"We're definitely going to have to diversify so we're not so dependent upon scooters," he said. "It's a question of how much you want to dilute the brand name. It's just a soul searching."

He estimated Razor would sell 5 million scooters by the end of the year and said it was considering going public or becoming independent from its Taiwanese holding company.

He said his design team was developing new scooters in a bid to keep the craze alive. Along with innovative models with additional features, he said Razor bicycles or skateboards could be in the company's future.

END OF THE LINE?

Analysts say the popularity of scooters is almost certain to wane at some stage. And for Razor specifically, knock-off versions, some priced as low as $40, might dampen its sales. Its original model is priced at about $100.

Many scooters sold in stores such as Toys R Us,, Target, Kmart Corp. and Wal-Mart are made by bicyclemaker Huffy or others. In fact, scooters have helped fuel a turnaround for Huffy.

"For the most part, Razor remains the product of choice, but some other scootermakers captured some customers that Razor couldn't get at its $100 price," Gerard Klauer Mattison & Co. analyst Melissa Williams said.

"Kids historically want the real thing," said Gustavo Pena, a spokesman for Brookstone, which sells the Razor scooters.

Outside of the Christmas selling season, the scooter business also faces seasonal constraints, analysts said.

Jim Silver, publisher of the consumer book "Toy Wishes," said parents who give scooters for the holidays are essentially telling their kids: "You've got $100 and here's your special gift and you can't use it for three months. It won't be the hottest thing when there's 6 inches of snow on the ground."

But Calvin, who estimates Razor's market share at about 50 percent, said exercise-related toys have a knack for resiliency, noting how skateboards and roller-blades have gone through cycles of declining popularity only to see a rebirth.

RETAILERS RIDE ON RAZOR'S EDGE

The scooter craze has been a boom for specialty gift retailers, not just toy store chains. Brookstone and Sharper Image, which specialize in trendy, high-end gadgets, both carry Razor scooters, displaying them prominently in their stores.

Managers at stores of both chains in Manhattan said demand for Razor scooters has been high, particularly in the last week, although they declined to give precise sales figures.

Brookstone has carried Razor scooters since they hit the market and is counting on strong sales through the year-end buying season, spokesman Gustavo Pena said. He said the scooters have consistently been among the store's three top-selling products.

Sharper Image has been using scooters to drive sales growth all year. Sales at stores open at least a year rose 43 percent in October, fueled primarily by Razor scooters. Without the scooters, its same-store sales rose just 10 percent.

But keeping that momentum will not be easy, analysts said.

"It might be hard for them to find a product again as successful as the scooters," Koerber said of Sharper Image.

She said the company saw unprecedented same-store sales growth of almost 80 percent in the summer primarily as a result of scooter sales. "That puts them against some tough comparisons for 2001."

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