SPIN MASTER – ON THE RISE!
Spin Master’s Q1 2018 results announcement (last week) featured strong results despite market turbulence caused by the ongoing challenges posed by the collapse of Toys R Us. Q1 revenue for Spin Master was reportedly 26% higher vs the same period last year. Clearly this is good news at a time when the industry is still reeling from the impending loss of Toys R Us as we knew it!
Clearly an earlier Easter in 2018 will have helped – as Easter is typically the 2nd largest sales ‘bump’ in the sales chart after the back end holiday season. Also the fact that Spin Master is riding high on several hit product ranges (most notably Hatchimals & Paw Patrol) has clearly played a big part in this Q1 success. This product success is not a passing flash in the pan however – one of Spin Master’s ongoing strengths has always been launching new innovative products to market – right back to Air Hogs, that first hit which springboarded the company onto greater heights originally. Spin Master are still as likely as any toy company to launch the next big hit – despite their growth and their fairly recent stock market flotation, their ability to ‘spot’ a good product and to launch winning franchises has not diminished.
What has also been evident in the last few years though is a clear strategy and concerted effort to underpin the smash hit products with a sturdier foundation base of solid dependable business – for instance the acquisitions of Cardinal (as part of the most successful and disruptive entry into the board games category for decades), Swimways & others are broadening the base of Spin Master’s business. Actually, Spin Master have a kind of unique opportunity right now – Hasbro & Mattel are now too big to acquire this level of companies – acquisitions below c. $200m-$500m don’t make as much sense for these long term toy business stalwarts as they used to – both these major toy behemoths are now simply too big to take advantage of the easy wins Spin Master can expect to reap by opening the purse strings. It looks like we can expect to see more acquisitions going forward in the realm of $20m-100m USD for Spin Master.
The other point to highlight with Spin Master is the competitive environment in which they are succeeding – in some ways the toy business has never been stronger – bar the sad news re. Toys R Us & a relatively bad year for movies/movie toys in 2017, the industry is in a pretty good place with a growing population set to ensure long term growth for the toy biz. There are many companies strongly competing & succeeding in the same space as Spin Master, which makes their rise & rise all the more impressive.
Authors note – I do not own any stock in Spin Master, & have no current intention of owning their stock. This is not a paid for ‘advertorial’, I just wanted to write an article acknowledging Spin Master’s journey & success. In future articles we will look at other toy companies, if you would like your company to be featured, please feel free to drop us a line!
by Steve Reece, CEO of Kids Brand Insight www.KidsBrandInsight.com, a leading toy expert consultancy to toy companies around the world. Services include Sourcing/factory finding especially in India & other ‘new’ manufacturing economies, toy business consultancy and product representation.