Second quarter earnings season continues with further reflection of the challenging year faced by the toy industry thus far.
Spin Master Corp. is the latest to check in with revenue falling 16.9% to $420.7 million in Q2 versus $506.3 million during the same period last year. Spin Master, which reports across three “creative centers” says that a 20.9% decrease in revenue from Toys was offset by a 19.4% spike in Entertainment and a 0.5% gain in Digital Games. The lower sales in Toys are attributed to lower retailer orders due to heavy carryover from last year’s holiday season.
Despite the slide in Q2, the company is staying the course on guidance for the year and looking toward the back half to bring excitement and revenue.
We are confident in our plans for the second half of the year including exciting Toy innovation, new Entertainment content and the continued development of our Digital Games ecosystem. Our Toy portfolio features the breakthrough Bitzee, a digital pet you can actually touch, a toy line inspired by the highly anticipated second 'PAW Patrol' feature film and many more new items that will inspire stimulating play experiences for kids and families worldwide. In Entertainment we are launching two new animated TV series, 'Unicorn Academy' and 'Vida the Vet,' and the second feature film in our iconic franchise 'PAW Patrol: The Mighty Movie,' in theaters end of September. In Digital Games we will deliver engaging new content for 'Toca Life World,' a content bundle for 'Sago Mini' and 'Paw Patrol Academy,' an app launching with the movie. "
For the first half of 2023, Spin Master’s revenue declined 25.6% to $692.1 million compared to $930.5 million last year. Declines in revenue from Toys and Digital Games were offset by a spike in Entertainment revenue.
“Our results for the quarter and year to date, as expected, were challenged in comparison to 2022. However, we are encouraged by the strength and resilience of our global, diversified business platform and our ability to execute our strategy to drive profitable growth, delivering adjusted EBITDA of over $88 million for the quarter,” says Spin Master’s Chief Financial Officer Mark Segal. “The inventory reduction activity at retail resulting from the carryover of inventory from 2022 is complete and we are pleased to maintain our 2023 outlook. Our very solid balance sheet and cash flow generation capabilities provide opportunities to leverage our global platform for both organic growth and acquisitions.”
This year, Spin Master closed its deal to purchase HEXBUG from Innovation First International and acquired assets from 4D Brands International. Additionally, the company says that it acquired assets from a games and puzzles company in Q2.
Spin Master has incurred restructuring expenses related to a reduction in its global workforce and the closing of its manufacturing facility in Calais, France.
Looking ahead, Spin Master expects overall sales in the toy department to be on par with or slightly down from last year.
