With the first half of the year behind us and strong sales reports in from Hasbro, Mattel, and Spin Master, the NPD Group says the toy industry is poised to turn the corner on Toys “R” Us in the U.S.
According to the NPD Group’s mid-year sales report, year-to-date sales through June saw the total U.S. toy industry drop by $734 million to $7.4 billion, a decline of 9%. The data shows that the numbers reflect “unfavorable comparisons” to the previous year, particularly due to the Toys “R” Us liquidation sale, which took place in the spring of 2018. For a better picture of the overall state of the toy industry, the NPD Group points to the compounded annual growth rate (CAGR) from 2016 to 2019, which shows a 1% increase.
“January through June 2018 sales were up 7% due to the Toys “R” Us liquidation that began in March and ended in June,” says Juli Lennett, vice president and industry advisor, toys, the NPD Group. “This year, January through June 2019, we no longer have Toys “R” Us stores or the incremental impact from the liquidation, resulting in a double hit to sales. In the next six months, however, we should see a complete reversal of the negative trends as we will see gains due to new sales compensating for the pantry loading from the liquidation as well as a reduction in the evaporation of toy sales due to the Toys “R” Us closure.”
When Toys “R” Us closed the books on its initial 70-year legacy in the U.S. last year, the doors of opportunity opened for numerous other players. Specialty retailers have upped their game, while mass retailers including Target and Walmart have expanded their toy selections. Additionally, smaller chains, including regional grocers and hardware stores, have added additional space and selection devoted to toys.
NPD has a positive outlook for the remainder of the year, noting that not only will negative Toys “R” Us comparisons no longer impact the numbers, but that the strong array of licensed movie tie-ins should provide a solid boost during the holiday season.
And the growth is already happening.
During the last three weeks ending July 20, the toy industry has achieved a 9% year-over-year increase versus the same period last year.
Of course, the ghost of Christmas past still looms, as Tru Kids Brands preps to open a pair of new Toys “R” Us concept stores in partnership with b8ta this November.
