Dusseldorf The traditional toy manufacturer Haba is sliding deeper into the crisis. The family business from Bad Rodach in Upper Franconia announced on Tuesday that Haba Sales GmbH had filed for self-administration bankruptcy, which the Coburg district court had granted.
“The application for self-administration was anything but easy for us,” said managing director Mario Wilhelm on Tuesday. However, given the tense economic situation, the insolvency proceedings are the only way to quickly return the Haba Group to its former strength.
Haba produces toys, fashion and furniture, the best known being wooden toys and board games such as “Orchard”. The company had already announced drastic job cuts in July, without giving a specific number. Negotiations are currently taking place with the works council. Insiders fear that up to a third of the approximately 1,800 jobs at the headquarters will be lost.
In addition, managing director Wilhelm announced at an emotional works meeting at the beginning of August that continuing the children’s brand Jako-o would “fundamentally endanger the existence of the company”. The mail order business has no future “due to protracted economic problems” and will be discontinued at the beginning of 2024.
Haba has appointed the restructuring expert Martin Mucha as general representative for the insolvency in self-administration. He said there was a good chance of putting the Haba Family Group back on solid footing. Attorney Tobias Sorg was appointed as the provisional administrator.
Haba is discontinuing its Jako-o mail order business. It recently suffered from delivery problems.
(Photo: Haba)
These are the toughest cuts in the 85-year history of the family business. Decisions have been made in recent years “that subsequently turned out to be wrong,” said Mario Wilhelm. “We have to admit that and correct it.” Wilhelm has been working at Haba since 2010 and was appointed to the management of the Haba Family Group in May 2023.
Added to this were sharp increases in material costs, bottlenecks in the supply chain and a failed IT conversion. This led to major problems with order processing and a sharp drop in sales.
The union is worried. The workforce is angry and disappointed. Entire families are often employed at Haba, said Nicole Ehrsam from IG Metall Coburg. The extent of the economic difficulties surprised everyone. The previous managing director Tim Steffens presented the situation positively until the end and apparently covered up management errors.
Jako-o was a milestone for Haba
Steffens, who joined Haba in 2019, left the company in March. Just two years ago, the former CFO of the sandal manufacturer Birkenstock had big plans for the traditional company. Steffens wanted to increase sales from around 360 to 500 million euros by 2025, he told Handelsblatt in 2021.
Haba also ran workshops in Asia where children could discover the digital world in a playful way.
(Photo: Haba Family Group)
At that time, Haba generated 44 percent of its sales digitally. Steffens wanted to bring Jako-o’s webshop to ten European countries and link it more closely with the previously separate divisions Haba for wooden toys and Haba Pro for daycare and school furniture (formerly Wehrfritz).
Software change led to order chaos
But the digital merger of the three independently managed divisions turned into a fiasco. Problems arose when converting various outdated software to SAP4/Hana. There were significant delays in online orders, which angered customers and caused sales to plummet. There is also said to have been internal resistance to merging the divisions because toys and furniture were too different. The traditional children’s mail order company Jako-o is now being closed completely.
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Many of Haba’s digital dreams have already been dashed. In 2021, the online shop Qiéro for women, which recently had a turnover of 20 million euros, was discontinued. In April 2023, the Upper Franconians had to close their flagship project, the Haba Digitalwerkstätten. These were founded by Verena Pausder in 2016, and Haba later gradually bought the workshops.
The new managing directors are supposed to lead the Haba Family Group out of the crisis.
(Photo: Haba)
Children between the ages of six and twelve were able to discover the digital world in a playful way by programming and building robots or doing 3D printing. Haba also operated several “Haba Learning Centers” in India and China. But the digital workshop business model “did not develop positively economically despite several conceptual adjustments,” said the Upper Franconians, justifying the closure.
Now Haba is forced to return to its roots: wooden toys and furniture “made in Germany”.
“Toys to inherit”
The company was founded in 1938 by Eugen Habermaass and Karl Wehrfritz. Haba produced wooden toys and educational board games, and Wehrfritz produced furniture for kindergartens and schools. The first product, the wooden duck on wheels, became Haba’s trademark.
When founder Eugen Habermaass died in 1955, his wife Luise took over the business. “Our grandmother was very brave back then. “Without any commercial training, she learned the ropes intuitively and quickly,” said granddaughter Sabine, whose father Klaus later joined the company. The first external managing director came in 2003.
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Haba remained loyal to Germany, even when in the 80s and 90s almost all toy manufacturers moved to China for cost reasons and wood was predominantly replaced by plastic. “Toys to pass on” is Haba’s motto. Because of their longevity, Haba toys have a high emotional value, says Sabine Habermaass. As managing partner, she represents the third generation of the family business for her two siblings and is a mother of three herself. “Where are there still things today that accompany you through life?”
A milestone for Haba was the founding of the mail order company Jako-o in 1987. There the company offered products for children up to the age of ten, from mud pants to furniture to toys and craft items. “That was the step away from specialist retailers and kindergartens to the end consumer,” Sabine Habermaass once told the Handelsblatt. However, Jako-o’s stationary stores were not financially viable and were gradually closed, with the exception of one branch in Bochum and an outlet in Bad Rodach.
In 2019, Tim Steffens became the toy company’s new managing director and wanted to lead the company to more growth, especially digitally. However, Haba slipped into crisis during the corona pandemic. The German toy market initially grew above average, but in 2022 domestic sales fell again by around five percent to 4.7 billion euros.
But Haba made a loss of 4.4 million euros in the middle of the pandemic in 2021, after a profit of 6.6 million euros in the previous year. Sales fell from 359 to 352 million euros. The equity ratio was still around 80 percent in 2021.
In 2022, however, sales will have shrunk further to 313 million euros, “Wirtschaftswoche” learned from a company insider. For the current year, Haba only expects sales of 250 million euros with an annual loss of 70 million euros. The goal of 500 million euros in annual sales by 2025 is history.
Since Jako-o represented an important part of the Haba Group’s business, the company will be significantly smaller in the future. In addition, the Upper Franconians, who currently deliver to 60 countries, want to concentrate on the most important core markets. A spokeswoman emphasized that Haba should remain a family business in any case.
Steffen Kahnt, Managing Director of the Federal Association of Toy Retailers (BVS), has hope for the toy manufacturer despite the current crisis: “Haba stands for high quality and made in Germany. This gives the company the best market opportunities in the high-quality toy segment.” Because Germany’s consumers value brands that stand for sustainability.
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