Over in the US, it is the start of another ‘earnings season’, with Q1 results starting to be unveiled this week. Before anyone gets too carried away by the inevitable knee-jerk ‘trouble in toytown’ headlines, I think it’s important to offer some sort of perspective – basically, don’t believe the gripes. First and foremost, no-one in the toy community wins or loses the year in Q1 – it would be like Arsenal celebrating winning the Premier League title at Christmas (sorry Gooners, I really did want you to do it, if only to make a change from Man City’s continuing dominance). In practice, true powerhouses tend to come through in the end.
And this year’s Q1 results, especially for US-owned companies, were always going to be a bit brutal, as the US toy industry gets to grips with an underwhelming festive season that saw suppliers and retailers left with significant overstocks. In the end, both Hasbro and Mattel saw double digit declines in Q1 toy sales after retailers tightened inventories, although those numbers felt much more of a ‘blip’ than anything to worry about longer term.
Still, no surprise that Mattel has being doing its best to deflect from its impending results all week by releasing a succession of positive stories about range launches and other developments coming soon. In fairness, I see these as far more important – you get far more of a sense of how confident a company is by looking forward, not back.
In amongst these releases, including the widely praised launch of Mattel’s first-ever Barbie doll based on children with Down’s Syndrome, perhaps the most intriguing was the announcement that Mattel and Hasbro will be collaborating by creating new ranges based on each other’s iconic IP, including Barbie Monopoly as well as Uno and Hot Wheels Transformers ranges.
This news certainly raised a few eyebrows in the toy community, as it is the first time the two companies have worked together in this way. Some people even wondered whether this historic agreement was the precursor to something far bigger – namely a merger or acquisition between the two parties. I guess you can never say never where corporate America is concerned, but personally, I just don’t see that happening any time soon.
Of course, I may be completely wrong about that (there are never any guarantees where shareholders are concerned), but I have spoken at length to senior people from both organisations in recent months and it feels like they each have solid courses to follow and there is definitely a belief that better times are ahead. Arguably, it’s when there is no plan and little optimism that mergers and acquisitions tend to find their way onto the table. But there is undoubtedly optimism; Mattel is confident that the Barbie movie will give a massive boost to the brand, while Hasbro’s Blueprint 2.0 strategy is very much underway, a plan which company leaders strongly believe will transform the company’s fortunes in the coming years.
I see this new licensing arrangement more as a sign that the bloody-mindedness of the past is giving way to a more pragmatic, common sense approach, as new management teams take the helm at both companies. The animosity between the two companies was real in the past – who can forget the badge of Action Man throttling Barbie which was worn by Hasbro staff when a merger was on the cards previously. However, it could equally be said it was a kind of confected rivalry that became blown out of all proportion (US execs not talking to each other in social settings for example). The UK arms of these companies haven’t behaved like that for many years – they work together in perfect harmony on the BTHA, TIE and various toy safety, charity and media committees. Anyway, there are way more than just two big global toy companies these days (Lego, MGA, Spin Master, Moose, Jazwares etc), so their competition is far broader than it used to be, and I think this tie-up makes perfect sense for both parties. It is good to see the invisible barriers of the past being broken down and from where I am sitting, I see no reason why this can’t be developed even further going forward. Why would you not sign the best licences for your brands, or agree licensing deals with the best partners – wouldn’t that just be cutting your nose off to spite your face?
Here in the UK, earnings and financial reports hold far less sway than they do in the US, although I was interested to see that buried deep within the Sainsbury’s results this week was the news that Argos sales rose by 9.3% last year. There is no individual category breakdown, so no-one knows whether that increase applied to toys, but if nothing else, it offers some vindication for Argos’s current strategy. Whether that will be enough to make all toy suppliers feel more positive towards Argos is another matter, but internally, this performance will certainly give the team confidence over the direction of travel.
Elsewhere, congratulations to Neil Bandtock as he takes up his new role as executive director at Canal Toys, while conversely I hear there will be some other senior people coming onto the toy job market later this year…. more news as and when we can share.
Finally, as some of you are aware, Anita and I became grandparents for the first time at the weekend, when our eldest daughter Alanna and her husband Ibs welcomed their daughter Poppy Lina. A lot of people have told me from experience how wonderful it is being a grandparent – mainly because you get all the fun parts and can give them back afterwards. It also means I will be looking at Infant and Pre-School toys and programming through an entirely different lens once again. I am sure it has changed quite a bit since our girls were little, although some things remain reassuringly familiar – Little Mermaid was always a favourite in our house, for starters. Anyway, I am looking forward to immersing myself in that world all over again – without the sleepless nights this time around. Good to see the Baulch family doing its bit to increase the toy (and nursery) customer base – and thank you to everyone who has sent through presents and good wishes, including some absolutely amazing personalised gifts. What a lovely bunch you are – she is certainly not going to grow up short of toys.