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The Wall Street Journal Interactive Edition -- December 27, 1996

More Proof That Grownups Are Nuttier Than Their Kids

By ROBERT BERNER Staff Reporter of THE WALL STREET JOURNAL

The price run-up on these babies would make a commodities trader blanch.

But the 50% surge isn't for soybeans or cocoa beans. It's the latest crop of
Beanie Babies, little toy animals stuffed with plastic beans that kids -- and
some adults -- crave.

Some retailers are charging as much as $7.50 for the critters, although the
suggested retail price is $5. Stories abound of even steeper price hikes.

This gives their creator, Ty Warner, owner of Ty Inc. of Oak Brook, Ill., the
blues. He says he designed the line of stuffed toys three years ago to sell at a
price that children "with pocketbook money and allowances" could afford.

Retailers, he says, pay $2.50 a baby. "They should be happy to double their
money," he adds. "Anything over that is just taking advantage of an opportunity
and milking it."

Alas, Gazebo in New York sells Beanies for $7.50. Owner Robert LoMonaco says he
is just trying to cover the high costs of retailing in Manhattan.

In Los Angeles, Pumpkins Toys charges $7 each. "Things come in and we mark them
up accordingly," says owner Renee Scherrer.

Antiques & More in La Grange, Ill., pegs the price at $7.25. Owner Sue Riggio
says she charges that because she doesn't buy them directly from Ty.

Indeed, a gray market has developed for Beanie Babies. Ty only sells directly to
independent retailers, not mass merchants. Yet somehow middlemen are getting
their hands on the things, Mr. Warner contends. He says he has hired private
investigators to figure out how.

A Walgreen Co. drugstore in Antioch, Ill., buys its Beanies from a middleman
because it can't buy from Ty, says John Heleniak, store manager. It charges
$5.99, which Mr. Heleniak calls a fair price given that "I get them for $4."

The middleman, Garry Nusinow, says he gets them from another supplier, whom he
refuses to disclose. "I pay $3.25, plus freight," he says. That has gone up from
a month ago, when he could order them for $2.95. "My profit margin on the Beanie
is less than anything I sell," he adds.

Mr. Warner concedes the price would be lower if he sold to mass merchants like
Wal-Mart Stores Inc. But, he says, "We are trying to make them a little exclusive
and hard to get and keep them that way."