Despite a challenging year overall, the company reported an 18.3% increase in gross product sales for the fourth quarter, rising to $550.7 million, up from $465.5 million during the same period in 2018. For the year, Spin Master says that revenue fell to $1.58 billion compared to $1.63 billion in the prior year — a 2.1% decrease. Gross sales for the year fell $16.8 million to $1.69 billion, a 1% decrease that in constant currency was essentially flat.
“Our overall performance in the fourth quarter and for 2019 was disappointing. Despite the solid performance of several of our brands and franchises, we were unable to fully offset the year over year decline in Hatchimals sales. Furthermore, we did not execute at the level needed to meet our profitability targets,” says Ronnen Harary, Spin Master’s chair and co-CEO. “Spin Master is committed to innovation and has a proven ability to develop breakthrough toys, entertainment franchises, and digital toys that entertain and spark imagination for kids and families globally. Our industry is evolving and we are moving quickly to adapt to the new opportunities, leveraging the underlying strength of our core business, our dedication to innovation, our global distribution network, and our financial stability. As we consider our prospects for 2020 and beyond, the strength, diversity, and depth of our portfolio give us confidence that we will deliver long-term growth.”
For the year, Spin Master scored a big win in the boys action and construction category, which logged a massive 149% increase versus 2018. Sales spiked to $331.4 million versus $133.1 million in 2018 thanks to increases in Monster Jam, Bakugan, DreamWorks Dragons, and initial shipments of the new DC Comics-licensed products, which officially carried a Jan. 1 street date.
The combined activities, games and puzzles, and plush categories rose 0.5% thanks to increases in Gund, Kinetic Sand, and Cool Maker, offset by declines in Bunchems, Kinetic Rock, and the overall games and puzzles portfolio. Similarly, preschool and girls fell 0.2%.
The biggest decline was in the combined R/C and interactive characters category, which fell 40.8% for the year due to declines in Hatchimals, Zoomer, Luvabella, and Air Hogs. Growth in Monster Jam R/C and strong sales for Owleez, Juno, and PAW Patrol R/C partially offset the overall decline.
Looking ahead, Spin Master says that it expects gross product sales to decline in the mid-single-digit range this year, excluding supply chain and other disruptions related to the coronavirus (COVID-19).
“We are committed to re-energizing our top line as well as developing a broad program that builds operating efficiencies into our business,” says Harary. “We have a clear strategic vision, a strong financial plan, a leadership team focused on execution and the entrepreneurial spirit and passion required for long-term success. Regarding COVID-19, we are monitoring the situation very closely and are assessing the impact to our supply chain as information becomes available. It is anticipated that the evolving conditions will have an impact on our global operations, as our manufacturing base in China, which produces approximately 60% of our goods, is not yet able to produce at full capacity. We do not know what the rest of the year will bring but we have initiated a broad range of actions to attempt to mitigate disruptions.”