While group revenue decreased 3.5%, new products drove sales for the infant and pre-school sectors.
Group revenue in North America, VTech’s largest market, fell by 5.9% to $470.1m in the first six months of the financial year 2019, but ELPs revenue rose by 9.6% to $210.9m, with growth in both standalone and platform products.
The increase resulted from strong sales in Canada and good growth in the US. This was achieved despite the closure of Toys R Us in the US, with VTech stating that “the group’s existing customers expanded their shelf space and assortment of toys to capture the business previously conducted by the retailer”.
Growth was led by sales increases of both VTech and LeapFrog branded products, with Chase Me Casey and the Stroll & Discover Activity Walker selling particularly well. Strong growth of LeapFrog products also reflected higher sales of infant and pre-school products.
In Europe, VTech’s second largest market, group revenue decreased by 3.2% to $400.4m. Sales in the UK were stable despite the closure of Toys R Us, while France, Germany, the Netherlands and Spain all recorded sales decreases. While sales of VTech standalone products were lower, good growth was achieved in LeapFrog standalone products.
Revenue from ELPs in Asia Pacific increased by 16.3% to US$40.7m, led by growth in mainland China and Australia. In mainland China, growth was driven by new product launches and channel expansion. Infant products and the Switch & Go Dinos range posted higher sales, while increased penetration of specialty maternity and childcare chains, as well as supermarkets and e-commerce channels, also contributed to growth.
In Australia, the group again performed well despite the closure of Toy R Us in the country, as broader listings and the group’s focus on channel management drove sales increases in both VTech and LeapFrog products.
Allan Wong, chairman and group CEO of VTech Holdings Limited, commented: “In the first six months of the financial year 2019 the group’s revenue and profit decreased. The lower-than-expected results were due to the overall weak performance of the group’s telecommunication products and the logistics issues in continental Europe for electronic learning products. There was, however, good progress in Asia Pacific, where VTech continues to expand its presence. The group also maintained market leadership in its core product areas.”