Hatchimals drives decline for Spin Master in Q3

The interactive toy brand contributed to an 11.6% drop in revenue for the company, to the tune of US$548.1 million.
November 6, 2019

Once Spin Master’s golden egg, the Hatchimals brand contributed to declines in Q3 2019 with gross product sales falling 11.4% to US$583.3 million. The Toronto-based toy and entertainment company saw revenue drop 11.6% to US$548.1 million for the third quarter.

Spin Master’s remote control and interactive characters segment saw a significant decline in the third quarter, with sales falling 50.7% to US$117.3 million due to lower sales for Hatchimals and declines for the Luvabella, Zoomer and Air Hogs brands.

The boys action and high-tech construction segment increased 177% to US$103.2 million, driven by strength for Bakugan, DreamWorks Dragons and Monster Jam. Spin Master relaunched Bakugan last year with new content and consumer products.

The activities, games, puzzles and plush segment declined 8.5% to US$152.4 million due to lower sales for the games and puzzles portfolio and weakness in the Bunchems brand. Falling sales for Party Popteenies and Rusty Rivets contributed to a drop for the preschool and girls segment (down 2.1% to US$204 million).

The outdoor segment saw sales fall 21.1% to US$6.4 million, meanwhile, and the other revenue segment increased 3.4% to US$26.7 million.

Europe continues to be a strength for Spin Master, with gross product sales up 1.6% in the region. Increases in Europe contributed to overall growth for the company in Q2 2019. In North America and the rest of the world, however, sales declined (15.3% and 12.1%, respectively).

In a statement, president and COO Ben Gadbois said Spin Master’s third quarter was negatively impacted by a shift away from direct import orders to domestic orders, as well as the decision to bring inventory in earlier in an effort to mitigate US tariffs.

Similarly, Hasbro named uncertainties attached to a looming trade war between the US and China as a possible detriment to its consumer products business. In its investor statement, the toyco announced additional tariffs on products manufactured in China and shipped elsewhere would “significantly increase the price of the company’s products and substantially harm sales.”

Moving forward, Spin Master plans to drive growth by increasing international sales in developed and emerging markets and leveraging its global platform through strategic acquisitions. The company anticipates its gross product sales for the fiscal year will grow in the low single-digit range compared to 2018.

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