A Burst Bubble At Topps

For years, Topps Co. rode the wave of the sports-card craze as it went from a $50 million market in 1980 to a $1.5 billion one in 1992. That boom in newly printed cards was largely fueled by soaring prices for classics such as Topps's 1952 Mickey Mantle, which fetched $49,500 at auction. Eager speculators bought new Topps cards by the case and stashed them away.

Alas, it was too much of a good thing. In their rush to capitalize on the boom, Topps and other sports-card manufacturers began flooding the market with dozens of card sets in the early 1990s. The result: Sales plummeted 20% last year as collectors--unsure that any of the newer cards would ever be valuable--rebelled. Profits at Topps, the market leader, tumbled 65%, to $19 million in the fiscal year ended in February, as sales fell 13%, to $263.2 million. "There has been a sea change out there," says Chief Executive Arthur T. Shorin. "This is not just a blip."

Wall Street agrees: Topps's stock has fallen 35% since Jan. 1, to about 81 2. And five irate shareholders sued Topps this spring, charging that through much of 1992 the company deliberately understated the weakness of its sports-card business, which accounted for two-thirds of sales, by delaying its accounting for massive returns from retailers. The suit is "absolutely baseless," Shorin says.

NEW HEROES. In response to changing tastes, Shorin, 58, plans to transform the baseball-card maker into a broader entertainment company. Topps, maker of Bazooka bubble gum, is marketing an expanded line of candy products, such as a Batmobile candy dispenser. It's publishing its own superhero comic books to take on such giants as Marvel Entertainment Group. And just because sports cards aren't selling doesn't mean Topps is abandoning them. It's issuing cards tied to popular movies and TV shows to appeal to kids.

It's a risky strategy that rests on devising products that play off the latest fad. Shorin recently curtailed production of a new line of cards tied to Last Action Hero when the movie fizzled. But when a theme strikes a chord with youthful fans, the rewards can be impressive. Consider Topps's Jurassic Park products. Shorin snared licensing rights for Jurassic Park comic books, trading cards, and candy more than a year before the movie became the summer's blockbuster hit. Salomon Brothers Inc. analyst Jill S. Krutick expects sales of Topps's dinosaur merchandise to approach $15 million this summer. Adds a field manager for Southland Corp.'s 7-Eleven stores in California: "We're blowing out of Jurassic Park stuff. We can't get enough in."

But fads, like dinosaurs, eventually become extinct. That's why Shorin hired longtime Marvel Comics artist Jack Kirby to develop a new line of Topps comic-book and card characters, such as Bombast and Captain Glory, to rival Marvel's X-Men and Spider-Man. He is also negotiating with Propaganda Films, a unit of PolyGram, to produce a movie based on Bazooka Joe, who was named after Shorin's father, Joseph.

Shorin's decision to deemphasize sports cards has brought some benefits. Krutick says profits could double this year, to $38 million, even on flat revenue. Why? Topps won't have to worry about last year's $68 million in charges and reserves for returns. But the real challenge will be convincing kids that a '93 T-rex could one day be in the same league as a '52 Mickey Mantle.

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