COVID-19 has not been kind to Spin Master, which saw a 12.4% decline in total revenue to US$281.1 million in this quarter. On the bright side, stuck-at-home kids fuelled some growth for the company’s games & puzzles and outdoor categories.
Overall, gross product sales dropped 10.9% to US$282.2 million due to closed stores and changing consumer buying habits, said Spin Master’s CFO Mark Segal in an earning’s call.
At-home kids drove 19.2% growth in gross product sales for the toyco’s activities, games & puzzles and plush category, which climbed to US$95.5 million. Driven by Kinetic Sand (pictured) sales, this growth was offset by plush brand GUND, which is primarily sold at specialty retail. Gross product sales for the outdoor category, traditionally one of Spin’s smaller divisions, grew 9.1% to US$34.7 million.
Spin Master’s remote control and interactive characters segment decreased 25.4% to US$33.2 million, primarily due to lower sales for the Hatchimals, Juno and Luvabella brands. Sales in the boys action and construction segment also dropped 30.5% to US$44.5 million, due to declines for the DreamWorks Dragons and Bakugan brands.
In the preschool and girls category, sales were down 22.9% to US$74.3 million, driven by lower performance of the PAW Patrol, Twisty Petz, Candylocks and Pre Cool brands.
The company’s other revenue segment dropped 6.3% to US$28.5 million compared to 2019, as a result of decreased income from third-party marketed products using Spin Master’s proprietary IPs, as well as less TV distribution revenue. However, app revenue from Toca Boca and Sago Mini helped offset these declines.
Q2 follows what Spin Master called a “challenging” first quarter that saw the company’s year-over-year revenue drop 4.9% to US$227.3 million.
Looking forward, Spin expects its puzzles & games and outdoor brands segments will continue to drive growth. On the content side, it’s optimistic that the Mighty Express brand will spark new growth opportunities once the show launches on Netflix next month. The company will also reduce its linear ad spend to focus on digital growth, said co-CEO Ronnen Harary on the earnings call.
The company’s supply chains have adapted, and consumers are returning to stores, which should result in smoother financial quarters for the remainder of 2020, says Harary. As Spin Master heads into Q3, it will focus on growing its international sales efforts. It will also develop new toy and entertainment properties and acquire other companies to improve its global reach and combat COVID-19.