Toy industry earnings season continues with Spin Master checking in this evening.
On the surface, Spin Master’s third quarter earnings reflect a welcome rebound from declines in Q2 as the toy industry continues facing a challenging year. Revenue of $710. 2 million marks a 13.8% increase over Q3 last year with big gains across all three of the company’s reporting sectors, dubbed “creative centers.” Revenue increased 71.4% in Entertainment, 30.9% in Digital Games, and 8.9% in toys.
While the Q3 growth, fueled in part by PAW Patrol: The Mighty Movie, managed to make up some of the ground lost in the first half of the year, Spin Master reduced its full-year guidance for 2023 due to a sluggish retail environment.
Looking forward, pressure on the toy industry is expected in the fourth quarter as a result of economic headwinds, which has reduced consumer spend. As macroeconomic pressure continues, we have seen POS and orders for toys slow down, particularly from mid-October. We expect this trend to persist for the remainder of 2023. Our team remains focused on executing our long-term growth strategy and we continue to invest and make significant progress by leveraging our deep expertise in play, well-established global network, and innovation capability to inspire future generations and unlock growth."
For the first nine months of 2023, Spin Master revenue declined 9.8% to $1.4 billion amid a 15.4% slip in Toys offset by a 5.8% gain in Digital Games and a whopping 54% spike in Entertainment revenue.
Within the Toys Creative Center, Preschool, Dolls, and Interactive products saw a 22.1% spike in revenue alongside a 4.4% gain in Wheels and Action. Outdoor toys, alongside Activities, Games & Puzzles, and Plush logged declines.
Updated guidance points to 2023 gross product sales in Toys to be down high single digits compared to 2022, as compared to flat to slightly down announced on August 2. Total revenue, excluding PAW Patrol: The Mighty Movie distribution revenue, is expected to be down mid-single digits compared to 2022, as compared to the flat prediction revealed on August 2.
Spin Master recently acquired the license to produce toys based on Paramount’s new Dora the Explorer series and made a deal to acquire Melissa & Doug that is expected to close in Q1 of 2024.
