The toy industry is looking almost robust; so where are the investors?

April 22, 2010

The toy industry continues to look relatively robust with a strong first quarter from Mattel and a solid performance by the retail sector in general. According to an April 16, 2010 MarketWatch piece, Mattel showed a first quarter profit as opposed to the losses it took during the same period last year. It seems that WWE and Thomas & Friends products along with a resurgent Barbie allowed the company to show increases in revenues and profits.

I think this could be good news for all toy companies as it makes the toy industry look like a relatively safe, and potentially lucrative, place to invest money. The toy economy, like any industry, needs money to grow. That money has been hard to come by even in pre-recessionary times with venture capital flowing towards the then high flying video game companies.

Maybe now that the big public companies like Mattel are seeing their stocks surge (shares up 19% so far this year) venture capitalists may see privately held toy companies as more attractive. Let’s hope so. We need more new growth.

Posted by Richard Gottlieb on April 22, 2010 | Comments (1)

April 22, 2010

In response to: The toy industry is looking almost robust; so where are the investors?
Mr.Right commented:

I bet you anything they have been frightened away by mom and pop retailers! There seems to be an odd phenomenon sweeping the trade shows. It has always been there but now it's become a monster. Many buyers are very much in a "sure it's selling now but just you wait, it's going to start to drop off sooner than you can wink an eye." defeatist attitude mode towards lines which show zero signs of slowing and are still in fact on their way up. Retailers need to get over their bizarre love for "Hit toy line failure gossip drama". This is very different than sharing info related to sales and how well lines do in their stores. That's normal. But this sort of " oh just watch, it's going to die" phenomena happens as soon as a line goes "beanie baby". It's as if the retailers set their stop watch and all get together to decide on a lines popularity and time at the top before the big fall, rarely doing what they can to keep it an evergreen. Hit toy line failure drama is a disease, and it's real. It needs to stop. Not all toy lines have the same shelf life, there is no magic clock. How many small shops are running demo tables or hitting up manufacturers for signage or displays!? Sure, you do this because you are here reading Playthings and staying on top of things. But the majority just don't get it. Investors are going to invest when the retailers invest.