In a climate in which toy sales are flat at best, Costa Mesa, California’s Playmates Toys is having a stellar year. The company’s sales shot up 62% in the first half of the year to US$55.9 million (compared to US$33 million for the same period in 2003). And operating profit leapfrogged from US$1.76 million to US$5.8 million – a whopping 900% gain.
President Lou Novak says this outstanding performance is largely the result of a restructuring and repositioning plan he started implementing in 2001. At the time, the company began moving away from shipping low-cost, unbranded toys directly from its Hong Kong owner Playmates Holdings, in favor of building core brands and selling them from its U.S. base.
Heavy TV advertising and hooking up with some white-hot licenses also helped drive 2003/2004 sales through the roof. Teenage Mutant Ninja Turtles, Speedez micro cars, Waterbabies and Disney Princesses are Playmates’ four core product lines this year. Of the four, Speedez has experienced the biggest growth so far, with sales up 169%. Disney Princesses product, including Playmates’ Little Princess dolls, posted a 56% increase, while the Turtles nunchuked their way through the international market and scored a 79% sales bump.
On the whole, Playmates’ international sales are up 177% and now comprise 27% of the company’s total revenue. Already selling in 46 countries, TMNT will hit four more in 2005, while Speedez will add roughly 20 additional territories to a distribution swath that already includes the U.K., France and Spain.
Novak is adding to the lineup selectively now, balancing proprietary brands with licenses targeting both boys and girls. The company has signed on as master toy licensee for Universal’s King Kong remake and Cartoon Network’s Atomic Betty and will be producing customizable dolls and lifestyle electronics for Nick’s web-based tween property everGirl. On the brand side, Playmates has picked up virtual pet Blinkies and yo-yo-based novelty toy Yo Stick.
Novak may tap a few more licenses for late 2005/2006, especially if they hail from big players such as Disney and Nick. He’d also like to develop more plush, lifestyle electronics and outdoor/novelty toys, and he isn’t ruling out taking a gamble on a hot but unproven concept. ‘You never know what’s going to stick,’ says Novak. ‘So 20% of your portfolio has to be innovative enough that you’re taking shot at it.’