First quarter earnings season continues with Toronto-based Spin Master as the latest of the publicly traded toy and entertainment companies to check in.
The purveyors of PAW Patrol bucked the trend in Q1 with revenue spiking 16.5% to $316.2 million, up from $271.4 million in the same period last year. While that total includes $40.4 million in revenue attributed to Melissa & Doug, which Spin Master acquired last year, revenue absent Melissa & Doug still increased 1.6%.
A bright sign for the overall health of the toy industry is that Spin Master says that revenue in its Toys segment spiked 21.5% in Q1 followed by a 16.5% gain in Entertainment. Digital Games fell 3.2%. Gross product sales in toys grew by 22.1% in Q1. Excluding Melissa & Doug, sales saw a modest 0.5% increase.
“As we approach the 30th anniversary of Spin Master’s founding, I wanted to reflect on our growth and evolution,” says Max Rangel, Global President & CEO. “Over the past 30 years, we have grown from an innovative start-up toy company to become a global, fully-imagined children’s entertainment company. We’ve continued to build on our leadership position in toys through disruptive innovation and have diversified our robust portfolio through incremental licensed partnerships, international expansion, the development of entertainment content, digital games capabilities, and compelling acquisitions.”
Looking ahead, Rangel says that the continued positioning of Melissa & Doug within the Spin Master portfolio and upcoming product and entertainment offerings should help growth.
“Our Toy gross product sales growth in the first quarter reflects the addition of Melissa & Doug’s trusted line of open-ended and developmental play to our toy business. In 2024, we will bring breakthrough innovation to the toy aisle, alongside impressive launches within our core and licensed brand portfolios,” he continues. “Our investment in the creation of multiplatform content including our two new original series Unicorn Academy and Vida the Vet, are expected to drive incremental toy and licensing and merchandising opportunities later in 2024. We will continue to expand our digital games ecosystem with the launch of Toca Boca Days and Rubik’s Match in the coming months. These digital games are designed to deepen and broaden our audience base, attracting kids of all ages and spawning new fans and player communities. Given our financial framework for value creation, the power of our three creative centers, and our strong financial position, we are well-positioned to execute against our strategy of reimagining everyday play and investing in innovation, content, geographic expansion, and acquisitions to drive long-term profitable growth and shareholder value.”
In its earnings release, Spin Master reiterated that the entire global toy industry “continues to be challenged by the macroeconomic environment” and “reduced consumer discretionary spending.”
To better incorporate the addition of Melissa & Doug to its portfolio, Spin Master realigned its Toy segment reporting to include four distinct categories: Preschool, Infant & Toddler and Plush; Activities, Games & Puzzles and Dolls & Interactive; Wheels & Action; and Outdoor.
Spin Master continues to hold firm on its full year guidance issued in February and will host an earnings call tomorrow.
