HP-2020-000016 - [2025] EWHC 1451 (Ch)

Cabo’s submissions and evidence painted a picture of enthusiastic support for Worldeez by toy retailers, prior to MGA’s intervention. Once Worldeez was launched in B&M, Cabo contended that its initial sales were very high, providing an indication of how strongly it would have performed but for MGA’s conduct. As with other aspects of Cabo’s case, I consider that to be an over-optimistic characterisation.

It is common ground that Stuart Grant at The Entertainer was very supportive of the launch of Worldeez. He was a friend of Mr Sivner, was keen to launch the product before other retailers, placed an immediate order for the product, and capitulated to MGA’s threats only after considerable resistance. It is also apparent that The Entertainer remained keen to stock Worldeez in September 2017 (see Gary Grant’s email to MGA described at §130 above). Stuart Grant confirmed in his cross-examination that he had been extremely supportive of Worldeez and considered that there was a significant opportunity for the toy.

There was, however, no evidence of comparable support from other retailers. As discussed above, both TRU and Smyths were interested in stocking Worldeez, but unlike The Entertainer had not placed firm orders for the product prior to MGA’s intervention at the end of May. Tesco and Argos had not shown interest in taking Worldeez, even before MGA intervened.

One of the problems with obtaining retailer support appears to have been that while Cabo had planned to launch Worldeez in May, the lead time required to get the product into stores had been badly planned. Argos was a particular example of that. Even if Argos had been interested, the timing of the Worldeez launch was in any event not early enough for the product to be included in the Argos autumn/winter 2017 catalogue. This seems to have been a problem with other retailers too. In a frustrated WhatsApp exchange between Mr Michaelson and Mr Cohen in mid-April 2017, Mr Cohen commented on a discussion with Mr Sivner and Mr Lazarus:

“For example when we said the dates, all you can hear is Alex saying ‘dreaming. Living in cloud cuckoo land. … Then saying the retailers need time to list. Hello … we’ve been telling them this for fuckin months”.

More generally, Mr Michaelson noted in September 2017 that “distribution has been badly managed. Even with the MGA issue. Grocers should have been approached many months ago.” Mr Lazarus accepted this in his evidence, acknowledging that the approach to retailers should have been planned more strategically. In particular, he said that Cabo had underestimated how hard it would be to get into supermarkets, and should have considered more carefully the timing of when supermarkets should be approached.

Cabo was, however, able to secure distribution of Worldeez in B&M, through Mr Sivner’s contact with B&M’s owner Mr Arora. While Cabo claimed that it remained “strangled” by MGA, Mr Arora was willing to take the product and was evidently not deterred by MGA’s objection to it – most likely because, as noted above, MGA was not at the time supplying LOL to B&M and could not therefore threaten B&M with refusal to supply, as it had done with other retailers. It is common ground that Worldeez did, initially, enjoy good sales at B&M. The dispute is as to whether those sales were of a level indicating that Worldeez would in the counterfactual case have enjoyed durable commercial success, such as to render Cabo profitable.

As to that, Cabo’s submissions as to the strength of the initial sales at B&M were, ultimately, not consistent with the weight of the contemporaneous documentary evidence. It is apparent that notwithstanding good sales on launch of Worldeez, the volumes of the globe sold remained far below B&M and Cabo’s expectations, leading Mr Arora to state on 19 July 2017 that if sales didn’t pick up he would have to have all the stock collected by Cabo (§164 above).

Even when sales had increased to 3,500 a week at the end of July, Mr Sivner described that as “not fabulous”, and the Cabo founders were sufficiently disappointed to question whether the figures they had been given by B&M were accurate (§166 above). At their peak, sales were 4,500 a week around the start of August. Ms Munt described that as “really strong” sales, but that figure remained considerably below the 20,000 a week which (according to Ms White) Cabo had predicted. It is, moreover, clear that by the end of August sales had dropped off. As set out above, the 5- and 10-packs did not ever sell well. It is also notable that although The Entertainer did initially stock the 5- and 10-packs of Worldeez, and some of the blind-bagged product in place of the globe, its orders were ultimately relatively small. It did not re-order any of the 5- or 10-packs after July 2017, and placed its last order for blind bags in September 2017.

At best that evidence indicates that the Worldeez globe was successful in B&M for around six weeks, but did not maintain consumer momentum thereafter; and the 5- and 10-packs were never successful. That is not indicative of a product with sufficiently strong appeal to go on to achieve a significant degree of commercial success. Rather, it is a typical pattern of a product which launches well on the back of an attractive marketing campaign but which ultimately does not maintain strong sales. Mr Harper gave several examples of innovative toys which had failed despite strong retailer support and good marketing campaigns, and Ms Munt accepted that more toys fail than succeed. Their comments were consistent with the evidence of Mr Garnham (“I’ve seen unbelievable product that my gut says ‘That’s going to fly’, and … it has gone into the bargain bin within weeks”) and Mr Grant (“there is plenty of product that gets mass distribution in every single retailer in the world and doesn’t sell”).