The toymaker industry is expected to rebound from last years "fluke" due to the economic down turn. So far, this year the small-cap Russell 2000 Toys index is up 43% which is raising moral for the investors. Mattel, even with its setback when numerous lines of Fisher-Price subsidiary were recalled due to safety hazards, had an increase in its stocks. Mattel and Jakks Pacific were both down more than eight percent in sales last year, but are looking strong this season, especially for the Christmas season. Mattel is estimated to increase another other 8.2% while Jakks is estimated to flat out. Which, by no means is unfortunate. Jakks is already up 48% this year in sales leading the market by almost ten percent.
Toys "R" Us, the largest toy retailer, is also benefiting hugely from this as well. And this holiday season, they are planing to open 600 temporary sales locations all around the country. That is a 71% increase in retailer outlets, which is an incredible amount of retail sales potential.
One reason for the major jump in sales for this year is that, last years down-turn caused a "leaner inventory". In other words, there is less back up of older "out-dated" toys and more space for new inventory. It also creates more competition because all the different toy companies are introducing the so called Big Guns to the market within the next couple of months.
As of right now, most companies are testing out the waters to see which toys/toy genres are a hit. This way, when late October rolls by they have a decent idea as to which toys to release for the holiday season.
It's interesting to look at economic down-turn in hindsight because was it not for the unfortunate event, these companies would not be making attempts to improve efficiency and new strategies for marketing and sales. Things like, Toys "R" Us using empty vendors in malls and other places to open temporary stores. For companies to test out the waters on what is successful and what is not; rather than make products left and right, and losing money on most of them because of lack luster sales. Not only is it bad for the company, but it is also a waste of employee time, resources and space - which all ties back into efficiency. Now, they are having to take a much more careful approach to introducing new items which in turn saves resources and space (space meaning junk in land fills, junk on store shelves etc). Hopefully, with all these new efficiency plans, companies can concentrate on things such as preventing led paint from "accidentally" being applied to toys. Unnecessary safety hazards with toys due to poor design (Fisher-Price just experienced this within the past couple of weeks), which are both unacceptable when dealing with small children. It is a responsibility they all hold in being world wide dealer toy dealers and makers.
http://www.businessweek.com/investor/content/sep2010/pi20100929_357980.htm
Interesting connections here, and it seems like you're really thinking about the implications of these numbers!
ReplyDeleteFor future reference: just the link to the article is perfect - copying and pasting the text into the post may just confuse who wrote what.