China Toy Fair


NPD Analyst: Retailers Scrambling to Recover Lost Sales

Marshall Cohen, chief industry analyst of The NPD Group, initially expected that the holiday 2010 season would “be remembered as a good year, not a great one.”
“To be great,” said Cohen right before Christmas, “the consumer would have to be in a frenzy and retailers would still be stocked with plenty of product to go around.” According to Cohen, retailers practiced the theory that it is better to sell out than to have leftovers.
On Monday, Cohen revised his outlook saying: “Holiday 2010 just went from a truly Merry Christmas for retailers to a lost weekend with retailers scrambling to recover lost sales.” Cohen called the post-Christmas weekend “brutal,” citing an already shortened post-holiday shopping weekend due to the holiday falling on a Saturday and the Sunday snowstorm in the Midwest and Northeast.
“All-in-all, retailers will lose about 0.5 [percent] of sales with the loss of this big post-Christmas day. And by the time they make it up, the sales will fall out of the range of the ‘holiday numbers’,” Cohen said. “Consumers will now have to wait longer to use those gift cards and make their returns. This is an important part of the sales in that consumers tend to spend approximately an additional 16 percent above the face value of gift cards and returns.”

Wild Creations Named “Fastest Growing Company in South Carolina”

Wild Creations was named the 2010 Fastest Growing Company in South Carolina for their whopping 313 percent average growth. The company was founded in 2007 by Rhett Power and Peter Gasca, and carried one core product: the EcoAquarium. Today, Power and Gasca oversee 80 warehouse employees who package over 80 SKUs to more than 2,000 retailers, including Brookstone, Hallmark, and Learning Express.

According to The Post and Courier, eligible companies “had to be operating for more than three years, have more than $3 million in annual revenue, and be headquartered in South Carolina.”

For more information on Wild Creations and its product lines, visit www.wildcreations.com.

Disney to Pay $269M in Damages to Millionaire Creator After Federal Trial

Last week, a federal jury awarded British-based Celador International, Ltd. $269.4 million in damages after unanimously finding that Disney subsidiaries ABC Television, Buena Vista Television, and Valleycrest Productions, Ltd., had breached their contract with the company to share profits from the game show Who Wants to Be a Millionaire?

The lawsuit (Celador International, Ltd. v. Walt Disney Co.) was filed in 2004 after The Walt Disney Co. reported that Who Wants to Be a Millionaire?, created by Celador, never made a profit and generated more than $70 million in losses for the company, although the game show took ABC from No. 4 to No. 1 in network rankings. Celador licensed rights to the game show to ABC Television and Buena Vista Television as part of a deal in which Celador would get 50 percent of the profits from the show.

The nine-member jury, after deliberating for two and a half days, found that the defendants breached the implied “covenant of good faith and fair dealing” they owed to Celador.

Hasbro Denies Potential Company Sale

Despite rumors that Hasbro was holding preliminary talks with private-equity firm Providence Equity Partners, Hasbro stated that it is not having any discussions with any firm regarding the sale of the company. Hasbro did confirm that it had been approached by a private equity firm regarding a transaction. The company said that its board of directors decided not to pursue any deal.

LIMA Reports Decline in Licensing Royalties as Licensing Expo Opens

According to the annual Licensing Industry Survey by the International Licensing Industry Merchandisers’ Association (LIMA), brand owners collected nearly $5.2 billion in licensing royalty revenue in North America in 2009, down 8.7 percent from the year before. This marks the second year of decline; overall royalty revenues declined 5.6 percent in 2008.

In the survey, brand owners cited last year’s sluggish consumer spending, a conservative climate at retail, a longer decision-making cycle, and royalty pressure as reasons for the decline. However, brand owners were optimistic, reporting success in expanding their licensing business internationally in 2009. Licensors also reported a continued trend of more diversified retail distribution.

In 2009, the character segment, which produces 46 percent of licensing industry royalty revenues, declined 7.9 percent. Other major segments of the licensing industry include corporate trademarks/brands (17 percent), fashion (14 percent), and sports (13 percent).

The survey results were released at the opening session of the Licensing International Expo 2010. The numbers were derived from results of LIMA’s annual survey of companies that are directly involved in the licensing business, an examination of public financial documents, and interviews with licensing industry executives.

Transom Capital Group Acquires Uncle Milton

Los Angeles-based private equity firm Transom Capital Group has acquired Uncle Milton Industries, Inc. Terms of the transaction were not disclosed.

“Toys have been a large part of my life, so it was important to me, personally, that the company find a partner who demonstrated a real commitment to the Uncle Milton legacy,” said Steve Levine, one of the owners of the company, in a press release. “Transom Capital was simply the right fit. They exhibited the same passion for the industry and quickly understood the key issues and dynamics that underlie the company’s success.”

Ken Firtel, managing director of Transom Capital, believes Uncle Milton is “a cornerstone acquisition” for its portfolio. “The founders, the Levine family, have safeguarded the company’s sterling reputation for over half a century by introducing fun and educational toys consistent with the brand’s focus. We believe that Transom Capital can add a level of operational sophistication that will improve its performance both from a top and bottom line perspective,” Firtel said.

Sherwood Partners served as an advisor to Uncle Milton during the transaction.

Walmart CEO Outlines Strategies for “Next Generation Walmart”

At Walmart’s annual shareholders meeting, president and CEO Mike Duke outlined four strategies for building the “Next Generation Walmart.”  He said Walmart is poised to deliver on Sam Walton’s vision of giving “the world an opportunity to see what it’s like to save and have a better life.”

The strategies are: (1) become a truly global company, (2) understand the business challenges that retailers will face and solve them, (3) play an even bigger leadership role on social issues that matter to its customers, and (4) keep its culture strong everywhere.

In order to be a more global company, Duke discussed the need to serve customers as a local store, share best practices, and leverage Walmart’s global supply chain. He stated that over the next five years Walmart will create 500,000 jobs around the world. Duke also discussed the importance on price transparency and low pricing, and being a company that stays strong globally.

The company also announced that its board of directors approved a new repurchase program that authorizes the company to repurchase $15 billion of its shares. This program replaces the previous $15 billion program, which was announced June 5, 2009, and had approximately $4.7 billion of remaining authorization. Under the program, repurchased shares are constructively retired and returned to unissued status.

Photo Credit: Huffington Post

Iconix Completes Peanuts Acquisition

Iconix Brand Group, Inc. has completed the acquisition of the Peanuts brand and related assets of United Media Licensing, a division of United Feature Syndicate, Inc., through a newly formed joint venture company, Peanuts Worldwide, LLC. The new company is 80 percent owned by Iconix and 20 percent owned by Charles M. Schulz Creative Associates, managed by the Schulz family.

This deal changes the landscape of Iconix and moves the company beyond fashion. Consumer products outside of fashion now represent approximately one-third of the company’s overall revenue.

In addition to Peanuts, Iconix has acquired the licensing and character representation for a number of character brands, including Dilbert and Fancy Nancy.

The purchase price for the acquisition was $175 million. Iconix funded its portion of the purchase price with cash on its balance sheet.

Saban Capital Group Acquires Power Rangers from The Walt Disney Company

Saban Capital Group, Inc. has acquired the Power Rangers property from The Walt Disney Company, marking the franchise as the first property to be managed by newly established Saban Brands. Saban Brands was recently formed as a subsidiary of Saban Capital Group to manage and license entertainment properties and consumer brands throughout the world.

The acquisition represents the return of the global franchise to its original developer, Haim Saban, who introduced the first Power Rangers series in 1993. The deal includes worldwide rights to the brand, as well as the more than 700 episodes produced over 17 years.

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K’NEX Donates Portion of Holiday Sales to Philadelphia Children’s Hospital

On April 6, K’NEX donated more than $20,000 to The Children’s Hospital of Philadelphia (CHOP), a donation that was the result of the company’s holiday fundraiser last year. During last November and December, K’NEX pledged to donate 10 percent of KNEX.com sales during those months to The Cancer Center at CHOP. The company also accepted additional donations through its website.

The Children’s Hospital of Philadelphia has been ranked No. 1 for pediatric cancer care by U.S. News and World Report and is the nation’s largest provider of services for pediatric cancer patients. Donations are helping CHOP researchers find the best non-invasive treatments and, ultimately, cures for every type of childhood cancer.

CHOP develops new therapies to treat pediatric leukemia and other blood disorders, brain tumors, sarcomas, retinoblastoma, and neuroblastoma.