Toy company Spin Master, behind strong brands like Paw Patrol, sees its sales fall in the fourth quarter

TORONTO – The toy manufacturer Spin Master Corp. saw sales fall in the most recent quarter after stores ordered early inventory to avoid shortages and high inflation hurt demand later in the year.

Max Rangel, CEO and global president of Spin Master, said Tuesday the company had experienced an “exceptionally strong” first half of 2022, partly due to retailers introducing toys earlier than normal in the year to address expected supply chain disruptions to minimize in the fall.

But the company’s toy revenue — behind brands like Paw Patrol, Bakugan and Hatchimals — was pressured in the second half of 2022 by “shifts in the macroeconomic environment,” it said in a statement.

Higher inflation, compounded by exchange rate volatility and a carryover of retail inventory from the first half of 2022, put particular pressure on Spin Master’s toy revenue, Rangel added.

The Company’s preliminary revenue for the fourth quarter totaled $465.8 million, compared to $620.5 million a year earlier.

The toy company, which keeps its books in US dollars, said that toy revenue for the quarter totaled $396.7 million, compared with $542.0 million while entertainment revenue was up Totaled $31.2 million compared to $28.5 million. Digital gaming revenue for the quarter was $37.9 million versus $50.0 million.

Spin Master said currency-neutral revenue for the quarter decreased 22.0 percent compared to the fourth quarter of 2021.

In November, Rangel told analysts that retailers were reducing orders across the industry due to higher stock levels on shelves.

“We’ve seen an impact on point-of-sale trends in the category over the year, and the average consumer is becoming increasingly price-conscious,” he said during a conference call.

For the full year, the company reported total revenue of $2.02 billion, compared to $2.04 billion in 2021, as toy revenue was $1.74 billion, up from 1.73 billion dollars last year. Entertainment revenue for the year was $118.8 million compared to $135.8 million in 2021 when Paw Patrol: The Movie was released, while digital gaming revenue for 2022 was 163, $9 million compared to $174.8 million.

On a constant currency basis, Spin Master said its revenue for 2022 was up 1.4 percent year-on-year. Excluding revenue from Paw Patrol film distribution in 2021, currency-neutral revenue increased 2.7 percent.

Spin Master is expected to report its full financial results after market close on March 8th.

This report from The Canadian Press was first published on February 7, 2023.

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The Canadian Press

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