Sales of preschool and girls products continued to drive double-digit growth at Spin Master, as the Canadian toy and entertainment company saw Q3 revenue increase by 31.7% to US$386.8 million and gross profit climb by 37% to US$205.2 million. Net income, however, did decrease by 7.3% to US$51.1 million in the quarter as a result of IPO-related costs.
Key drivers in Q3 were its Paw Patrol and Star Wars licensed merch, coupled with the launch of Meccanoid, Bunchems, Chubby Puppies and Little Charmers products. However, some of these gains were partially offset by declines in sales of Zoomer, Digi Bird and Flutterbye Fairy lines, as well as products connected to the How to Train Your Dragon film.
Nonetheless, numbers were up across all four of its business segments, with preschool and girls leading the way with a 71% increases to US$131.9 million. Boys action and high-tech construction was also up by 52% to US$93.5 million, while activities, games, puzzles and fun furniture segment grew by 25.4% to US$74.6 million. Meanwhile, Spin Master’s largest segment, remote control and interactive characters, saw 6% growth to US$137.8 million.
Spin Master also took big strides in sales internationally, with increases of 45.4% in Europe, 35.1% in North America and 10% in the rest of the world.
The company attributes its strong Q3 to improved operational efficiency that allowed it to ship products this quarter that historically would have been shipped in Q4. This is expected to provide retail buyers with added sell-through time to reach consumers during the busy Q4 holiday shopping season and also set Spin Master up for strong first half in 2016.
Taking a look at the company’s nine-month performance in 2015, preschool and girls is up 104.2 % to US$236.5 million; activities, games, puzzles and fun furniture is up 24.4% to US$131.2 million; remote control and interactive characters climbed 6.9% to US$183.3 million; and boys action and high-tech construction is relatively flat, with a 1.8% increase to US$144.2 million. Overall, revenue has increased by 29.9% to US$621 million.
As Spin Master enters Q4, it has high hopes for its Star Wars line, in particular its remote control Air Hogs Millennium Falcon quadcopter, which is trending to be sold out in early December, according to Spin Master’s global president and COO Ben Gadbois.
And going forward, Gadbois adds Spin Master is focusing on its four key growth strategies: continuing to innovate the core, creating successful entertainment properties, growing its international business and identifying/executing acquisitions.
“We’re pleased with our overall performance today. Early POS reads are encouraging and we are anticipating strong sell-through at the retail level. We are already hard at work on 2016/2017 and beyond,” Gadbois said in a conference call. “Our four key growth strategies are the right ones for Spin Master and will continue to create new growth opportunities as we move forward.”