HOW HAS Q3 PANNED OUT FOR THE TOY BUSINESS (HAS, MAT & JAKKS EARNINGS ARE IN)
One of the best ways to find hard facts about what is happening and what has happened in the toy business is to analyse quarterly earnings statements and calls from the stock market listed toy companies. So far, we have had earnings from Hasbro, Mattel & Jakks Pacific – and the results are really good, especially bearing in mind the ongoing supply chain issues this year. Hasbro reported a year-on-year increase in revenues for Q3 of 11%, which is incredible when you consider that last year was also an epic year. Mattel reported revenues up 7% on a constant currency basis. Even Jakks Pacific, who have a bit of a history of disappointing results in recent years are having a good year – although they were down 2% year on year for Q3, they remain up by 9% versus the same period of 2020.
All three companies highlighted in their earnings calls the issues they have experienced with logistics and supply chains this year. Yet all 3 have reported good results and good profitability. Hasbro’s key actions seem to have been earlier stock commitments and utilising their comparative strength to secure shipping capacity. Mattel have some significant advantages because they own a large proportion of their own production, which allows them considerable flexibility on production schedules and everything else. Jakks Pacific has historically (according to Jakk’s CEO Stephen Berman on several earnings calls) been an FOB focused business, with around 50% of their revenues shipping relatively early direct to retailers. Jakks also highlighted one of their key actions to manage the shipping crisis was to move finished stock to bonded warehouses in or near to Shanghai, and to then ship out of less overloaded ports in that region of China.
From a broader industry perspectiveNPD also reported recently that YTD end September the toy business is up 12% in the ‘G13’ countries which includes the USA, UK, France, Germany and other western toy markets.
There is no doubt then that this year will have cost some toy companies dear, and it has certainly been a massive headache for all. BUT yet again the toy business has proven how resilient it is, with sales proving remarkably strong and we should yet again be grateful to work in such a robust business.
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