The Product Traveled Further Than the Company
It was the world's largest toy maker in 1953. It stopped making its signature product in 1969 and liquidated its last 28 stores in 1993.
The Dial on the Floor by the Tree
You turned the dial on the transformer, and the locomotive crept forward along the track beneath the Christmas tree. The tiny headlight cut a circle through the living room.
You dropped a pellet into the smokestack and watched a thin thread of smoke rise toward the ceiling. You pulled the lever and the whistle sounded.
Every fall, the catalog arrived in the mail, pages of boxcars and water towers and crossing gates. You circled what to ask for next year.
The box was orange and blue. It said Lionel.
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The Starter Set Was Never the Last Purchase
The company was founded in 1900 in New York City. For nearly seven decades, it built electric trains.
The starter set brought the family in. Each Christmas the catalog arrived, and parents bought one new car, one new accessory, one new stretch of track. The train was the introduction; the annual return was the revenue.
In 1969, the company sold its tooling and licensed the name to a food conglomerate. The company that defined the American toy train never built another one.
It bought into a chain of discount toy supermarkets called Kiddie City, which had started in Philadelphia in 1957. For the next twenty-four years, the Lionel Corporation was a retailer selling other manufacturers' toys.
Christmas Did the Selling Every Year
The founder convinced department stores to put his trains in their Christmas displays. That linked the product to the holiday so tightly that no competitor could break the association. A family bought the starter set once and came back every December for additions.
The illustrated catalog doubled as a wish list. Children circled what they wanted, and parents bought one piece at a time.
By 1953, the company was the world's largest toy manufacturer, with roughly 2,000 workers at its factory in Hillside, New Jersey. The line generated $25 million a year in train sales during the 1950s.
After the train line was sold, the company's retail chain grew to about 150 locations by the early 1980s, the second-largest toy chain in the country.
The Audience Left the Tracks, Then the Aisles
Television in the mid-1950s gave children a new way to spend their time. The model train layout competed with a glowing screen, and the screen required no assembly.
By 1966, revenue had fallen to $28 million, and 40 percent came from government contracts, not toys. Train sales alone could no longer cover the factory or the workforce. The company filed for bankruptcy in 1967 and sold the train line two years later.
The toy stores faced their own structural problem. Non-specialty discounters expanded their toy aisles and undercut prices. A contested takeover attempt in 1989 drained the company's remaining cash.
Its role in the American household disappeared with the trains. Its role in toy retail disappeared with the price advantage.
Twenty-Eight Stores, Then None
The toy store operation filed for bankruptcy in February 1982, reporting $22.5 million in losses over two years. It emerged in September 1985 with 55 stores.
The second filing came on June 14, 1991, listing $351.5 million in assets and $255 million in liabilities. A contested takeover fight two years earlier had drained the company's cash reserves.
In its final fiscal year, the company reported $22.2 million in losses on $291.5 million in revenue. In June 1993, it liquidated its remaining 28 stores and ceased operations.
The Train Kept Moving After the Company Stopped
The trains never stopped being made. A collector bought the line from the licensee in 1986, and the brand passed through several owners before landing with a company that designs in North Carolina and manufactures overseas.
The model is the same one used across the modern toy industry. A company owns the name and contracts the production to someone else.
The company stopped building trains in 1969. The trains still circle the tree.
