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Spin Master praises resilience of toy industry as Q2 2020 results come stronger

2020-08-10 CTJPA

Spin Master has championed the resilience of the toy industry as well as the strength of its own portfolio of brands, entertainment franchises, and toys that have enabled the global toy maker to remain optimistic, despite posting a 12.4 per cent decrease in total revenue in its Q2 2020 financial report.
The firm has cited a ‘stronger than expected second quarter,’ despite the disruption suffered from Covid-19 that played no small part in the total revenue decrease to $281.1 million for Q2 2020, down 12.4 per cent from the $321 million in the same period for the year prior. Gross product sales at Spin Master decreased by 10.9 per cent to $282.2 million from $316.8 million in Q2 2019.
The company saw decreases across its pre-school and girls, boys action and construction, and remote control and interactive characters segments. These were off-set by increases in its activities, games, puzzles and plush, as well as outdoor segments – in line with the overall industry picture as families looked to these sectors for entertainment throughout the lockdown period.
“This quarter we demonstrated meaningful progress towards resolving the operational challenges we experienced in 2019” said Ronnen Harary, Spin Master’s Co-Chief Executive Officer.
“We are incredibly proud of the global Spin Master team, who remained focused on driving improvements across the company, while also managing through the complexity of COVID-19 for the full quarter. Our performance in the second quarter, which showed strong POS across most of our key brands, highlights the resilience of the toy industry, the strength of our diversified portfolio of brands, entertainment franchises and digital toys and our global platform.
“This is underpinned by our strong financial base, which positions us well for long term success. Looking forward, global economies are reopening but risk remains elevated and we are taking a cautiously optimistic approach to the second half. New opportunities continue to emerge, and we are prepared to take advantage as they arise.”
Gross product sales in North America saw a slight increase, by a decline of 21.6 per cent in Europe and 42.4 per cent across the rest of the world. Other revenue decreased by 6.3 per cent to $28.5 million, driven by lower royalty income from products marketed by third parties using Spin Master’s IP.
This was off-set in part by higher app revenue from its Toca Boca and Sago Mini platforms.
“Our overall performance in the second quarter was stronger than expected, despite the disruption from COVID-19” said Mark Segal, Spin Master’s Chief Financial Officer.
“Our global supply chain team responded well to the evolving environment and we made significant progress from an operational efficiency, profitability and cash flow perspective relative to Q1. Our financial position remains solid and we continue to have substantial liquidity available. As the year progresses, we will continue to focus on strengthening our core in order to build and maintain an efficient, high margin and sustainable global platform positioned for long term growth.”
Gross product sales in activities, games and puzzle, and plush increased by $15.4 million to $95.5 million, driven primarily by increases in Kinetic Sand and its Games and Puzzles portfolio, partially offset by declines in Gund. Remote Control and Interactive Characters decreased by $11.3 million to $33.2 million due to lower sales of Hatchimals, Juno and Luvabella. This was offset by increases in Monster Jam RC and PAW Patrol RC.
Boys action and construction also decreased, this time by $19.5 million to $44.5 million, driven by declines in DreamWorks Dragons and Bakugan, but partially offset by DC licensed products and Tech Deck. Pre-school and girls decreased by $22.1 million to $74.3 million, driven primarily by declines in PAW Patrol, Twisty Petz, Candylocks, and Pre Cool.
Outdoor increased by $2.9 million to $34.7 million.