John Menzies' half-year pre-tax profits fell by a third as a result of poor sales at its Early Learning Centre stores which cater for children aged up to five.
Hamleys also said Christmas trading was disappointing. It said trade started well at the beginning of December, then tailed off in the middle of the month before a late recovery. "Overall we were a little disappointed with Christmas," Hamleys director Michael Riddy said.
He said that even Hamleys' flagship Regent Street store in London had been quieter this year. Group sales in the five months to December increased by 3.6 per cent on the same period last year.
Analysts said that in addition to competition from computer games and sportswear brands, some toy retailers had been hit by aggressive pricing from Woolworths.
The poor figures from John Menzies forced the shares 67.5p lower to 477.5p. Pre-tax profits fell by pounds 1.2m to pounds 2.6m in the six months to 2 November due to difficulties in the retail division. Like-for-like sales were 1 per cent lower in the core chain with music and video sales disappointing. But in the eight weeks to 28 December sales were lower than expected with a 7 per cent slump at Early Learning Centre.
John Menzies' new managing director, David Mackay, said the problems were due to increased competition, internal mistakes and demographic changes which were resulting in fewer young children.