|
|
| 07/10/2010 - according to comScore, the German online gaming market is growing by leaps and bounds. In May, 19.8 million Germans played games online which is up 25% versus May 2009. Males represented 53% [up 21%] whereas females had 47% with an increase of 31% over May last year. In contrast, console sales are expected to go downhill throughout 2010. 06/08/2010 - some of my most important information sources are Chinese componentry and casual labor suppliers to the large toy factories. I quizzed them on the increasing dissatisfaction by Chinese workers with the pay they receive. Against this background, it is important to note that a number of foreign companies have more or less willingly hiked pay scale by as much as double. Foxcomm, a subsidiary of Hon Hai Precision Industries and a supplier of computers and mobile phones for Apple Inc, Hewlett-Packard, Dell and Nokia, agreed to increase the basic wage from the current 900 Yuan to 1200 Yuan by end of this month and to 2000 Yuan by October. While a number of foreign manufacturers think that they are insulated from this trend because they already pay the minimum wage, they are indeed mistaken as per my sources. The labor force will demand, and get, percentage increases in line with what is happening around them regardless of where they are in terms of pay scales. 04/12/2010 - http://watch.bnn.ca/#clip288010 - BNN News Canada - a televison interview which touches upon Iron Man 2, Avatar, How to train your Dragon and Spin Master's deal with Wal-Mart USA. 04/04/2010 - Zapf, the famed German manufacturer of dolls, now part of the MGA Entertainment group, continues to flag. Whilst the fourth quarter numbers are not out, my German friends tell me that these were "representative of the very difficult European toy market". In other words, bad! I hear that the company is under terrific pressure from their U.S. owners to diversify and they are testing plush products. Steiff, the German plush manufacturer, should be worried! 02/23/2010 - continued bad news for MGA Entertainment. Zapf Creation, its Germany-based doll manufacturer, continues to suffer sales losses. In 2009, Zapf showed a sales decline of nearly 25% or from the 2008 number of Euro 104.4 to Euro 78.8 million [or US$147.2 million in 2008 versus $112.9] in 2009. Preliminary figures also indicate a worsening of the bottom line - from a loss in 2008 of US$8.9 million to a loss of US$ 12.9 million in 2009. Zapf hopes that the Disney license will help them turn things around in 2010. 01/18/2010 - my German friends tell me that Lionel, the leading producer of toy trains with US sales in the neighborhood of $80 million, is getting ready to make a bid for Maerklin, Germany's famed toy train maker. The figure being bandied about is $50 million which represents about half of Maerklin's annual sales. 12/04/2009 - Unlike the US where estimates for December for the toy market vary between a negative 6% to a negative 2% versus December last year, Germany is looking at positive numbers. Willy Fischel, boss of the German national association of toy retailers, thinks that the Germany toy market will grow 4% in December. The German toy market is the third-largest in Europe, after UK and France, and this bodes well for German manufacturers such as Simba, Playmobil and Haba, as well as for the US manufacturers selling there - notably Hasbro and Mattel. 10/01/2009 - Zapf, MGA's German operation, is grasping for straws. After a row of negative quarters, the company has now decided to enter the toy license category which represents about one-third of Germany's overall toy market. Their first license is "Hexe Lilli" [Witch Lilli]. Other license negotiations are ongoing. 08/03/2009 - Lego has just been awarded the coveted "Golden Rocking Horse" prize awarded yearly by the Association of the German Toy Industry [DVSI] and the Familie&Co journal. They selected Lego's "Ramses Pyramid" board game for first place out of 70,000 new products to be exhibited the Nuremberg Toy Fair early next year. 07/17/2009 - Best-Lock just told me that "In a case between Best-Lock and Lego the German Supreme Court BGH (Bundesgerichtshof) ruled last evening - 7/16/09 and confirmed the cancellation of Lego's 3-D trademark that showed the 2x4 brick. The trademark was registered in 1996 at the German patent and trademark office but was deleted due to Best-Locks complaints. Lego took the case to the BGH which now has confirmed the cancellation. (Case # 1ZB55/07). 06/18/2009 - TopToy Holding A/S, Scandinavia's largest toy retailer [including owner of the ToysRUs stores in Scandinavia] will acquire K E Mathiasen, Scandinavia's largest toy wholesaler on July 1. 05/22/2009 - The movie season is upon us. It had been kicked off by XMen Wolverine, followed by Star Trek, and now by Terminator Salvation. The next blockbusters coming down the pike are Transformers 2 and Harry Potter Halfblood Prince. This is how the blog metrics look like - denoting consumer interest levels. It is striking how authoritatively Star Trek has supplanted XMen Wolverine and how it still shows an upwards tick just before the Memorial Day weekend. The Terminator also is coming up strongly. This picture is closely echoed by what I see in terms of movement of the toys from the shelves at the large retailers. 04/04/2009 - ToyFair 2009 was less of a stellar success than originally reported. Apparently, there were only 10,000 buyers visiting this year versus 13,000 last year or a decline of 23%. This compares with a +12% in 2008. There were 300 new exhibitors including the first-time for Bandai. However, some notables were missing - specifically LeapFrog and Jakks amongst others 03/02/2009 - The tribulations besetting MGA Entertainment continue. Their European jewel Zapf just published their 4th quarterly numbers. Yearly sales dropped 5.5% to Euro 104.4 and their net loss more than doubled from their 2007 number of Euro 2.7 million to now Euro 5.8 million. This adds to MGA's woes - a lost court case for Bratz, steeply declining Bratz sales, a claim for unpaid royalties from Marvel and now continued hemorrhage of money in Germany .......... 02/20/2009 - the Maerklin saga is turning ugly. The administrator of bankrupt Maerklin, Michael Pluta, has accused the former owners, Kingsbridge Capital, of mismanagement, payment of bribes, and systematic looting of Maerklin's assets. In turn, Kingsbridge is now filing suit against Mr. Pluta claiming that these statements are totally untrue and represent libel. Meanwhile, Mr. Karlheinz Menrad, the boss of Maerklin's Hungarian factory, which had not been included in Maerklin's bankruptcy, has been fired. He is accused of having transferred the sum of Euro 100,000 from Maerklin to Adler Toy a few days before Maerklin's declaration of bankruptcy. Adler also belongs to Kingsbridge and Mr. Menrad is Adler's CEO. Also, at the same time, Mr. Hans Reyher, Maerklin's CFO, has been fired and is in the process of contesting this. Note that one Euro currently is worth about US$1.60. The nominated toys are: 6/6/2008 MGA has upped its shareholding in Zapf Creations to 44.4%. In the US, where MGA is handling the distribution, Zapf has a very nice endcap in ToysRUs. 4/28/2008 TDmonthly featured an article of mine on Simba Dickie on 2/15/2008 - The Emergence of a German Toy Giant. You can read this in the Media Articles Section behind the Who we are tab. In this article I predicted that Simba Dickie would snatch the French toy company Smoby from under the nose of MGA. This in fact came about. Simba Dickie is continuing in their quest to add to their portfolio in preparation for their planned massive entry into the US. They will buy J Schipper Hobby-Ideen on May 1, 2008. Schipper is well known in Europe for their "paint by numbers" product range and is represented by Herrschner's Quality Crafts in the United States. 02/06/2008 I think that WalMart Canada is being incredibly unfair. They arbitrarily decided on a course of action which makes them look good in the eyes of the Canadian consumers but do so on the back of the small guy. They are also being less than candid. Quote from CNN Money of February 5. Late last year, with the strong Canadian (dollar) and customer expectations rising, we did detailed comparisons of our suppliers' Canadian and U.S. pricing, and worked to bring them in line. We were very clear with all of our suppliers that we would not tolerate unfair pricing for our Canadian customers. In some cases, that led to difficult decisions about the products we would stock. We are not prepared to discuss specific suppliers," he told Dow Jones.
WalMart Canada just announced that they were tossing Lego because the Danish manufacturer would not play ball with them in aligning retail prices for their goods with those applicable in the United States. WalMart is bent on doing so since the Canadian Dollar is on a virtual parity with the US Dollar. So far so good. However, Lego pointed out to Walmart that their costs, because of Canadian import duties and taxes, were totally different and also that they already had suffered because of the decline in the Canadian currency versus the Danish Kroner. They simply could not absorb another cut. I decided to look into this and you will see in the table below how the costs today compare if Lego ships to the United States or Canada. I also show how today's costs for Lego for Canada changed in the last thirteen months. I have assumed a shipment valued at 100,000 Danish Kroners and shipping costs of 5% - which should be higher for Canada because it is further away from Denmark and because of smaller economies of scale. | | United States 02/05/2008 | Canada 02/05/2008 | Canada 01/01/2007 | Goods shipped by Lego Denmark valued in Danish Kroners | 100,000 | 100,000 | 100,000 | | Shipping Charges | 5,000 | 5,000 | 5,000 | | CIF Destiation USA or Canada | 105,000 | 105,000 | 105,000 | | Harmonized code for import duties* | 9503.00.0080 | 9503.00.9039 | 9503.00.90039 | | Import duty and import taxes | 210 | 12,850 | 12,850 | | Land Cost Destination USA or Canada | 105,210 | 117,850 | 117,850 | | translated at exchange rate per Dollar** | 5.09250 | 5.05230 | 4.8499 | | Total revenue into the country** | US$20,660 | CAD23,326 | CAD24,299 |
* as per Fedex ** as per Oanda.com In other words, Lego already got a haircut of CAD 973 or 4% between January 1, 2007 and February 5, 2008. WalMart not only does not let them increase prices to make up for this, they now propose to reduce income further by another CAD 2,666 or 11.4%. No wonder Lego said no. I mentioned at the beginning of this entry that I thought WalMart to be less than candid in all this. It is not being very candid to quote the strong Canadian Dollar in all this. After all, the Canadian Dollar did drop against the Danish Kroner by 4% in thirteen months. 12/25/2007 This is the first look at what happened to the toy scene in the US in December. The first observation is that toys were soft inspite of a last minute rush on Christmas Eve. On the other hand, video games and consoles were very strong. This is supported by Google Trends for the two product categories as epitomized by the two leading specialty retailers: While at the beginning of the month both were running neck to neck, by 12/22 Gamestop had nearly doubled versus ToysRus. This is also borne out by a look at their respective store traffic during the week leading up to 12/24. I also interviewed my retailer panel for toys, 10 individual retailers in New England According to their numbers up to 12/24, the overall toy market during December was about 4% down versus the same period last year. The individual product categories performed as set forth below. I also show what these retailers rated as the top product from which company in each category: | Toy Category | Growth December 2007 vs December 2006 | Best Selling Product | Manufacturer | | Action Figures and Accessories | 2% | Optimus Prime Action Figure | Hasbro | | Building Sets | 1% | Monster Dino | Lego | | Games and Puzzles | -2% | Rubik's Revolution | Techno-Source | | Infant/Preschool | 4% | Smart Cycle | Mattel | | Youth Electronics | 10% | Eyeclops | Jakks Pacific | | Plush | 2% | Webkinz Reindeer | Ganz | | Vehicles | -5% | Pixar CAR Mack Truck | Mattel | | Fashion Dolls | -5% | Hannah Montana Singing Doll | Jakks Pacific | | Outdoor and Sports Toys | -5% | Airhogs Copter | Spinmaster |
12/5/2007 Lou Dobbs talked this evening on his program on CNN about the findings of the Ecology Center and their report that there are still a lot of toys out there with highly dangerous levels of lead, cadmium or other chemicals. He made in essence the following three statements: 1. The toy companies are lying through their teeth [and this is an accurate quote!]. 2. The CPSC is severely out of date in all they are doing, still sticking to standards that were put in place 30 years ago 3. Consumers should not feel safe and should not buy any Chinese-made toys this ChristmasI I also looked at all the toys featured as dangerous by the Ecology Center [Consumer Action Guide to Toxic Chemicals in Toys - www.healthytoys.org and can confirm that none of the major toy companies regularly followed by me are mentioned in it. I also looked at the blog metrics for Toxic Toys and Chinese Toys. It does appear that the whole issue quietened down some but is now again rearing its ugly head:  11/27/2005 Both WalMart and Target have set their toy space strategy in stone with their Black Friday reset. WalMart has for the past two months taken a very aggressive stance to the toy department on the premise that the consumers that come in for discounted toys stay to buy other products as well. Target, on the other hand, pursues a strategy of optimizing profit per square foot which militates against allocating more space to toys at the expense of other more profitable departements. 11/9/2007 Zapf has just released their third-quarter numbers. They had another sales decline - down 9.2% for the quarter to Euro 34.2 million. MGA looked to Europe for the growth no longer readily obtainable in the US market of theirs. Zapf was expected to be the engine pulling this train, particularly in Gemany, and it seems to be going backwards. Lego confirms that their supply problem has been resolved. They have ramped up production and their products - notably their best-selling Castle - will be available in time and in sufficient quantities to meet December demand. Wal-Mart and Target are showing their hand as to their intentions for the toy space. WalMart is expanding and Target is cutting back. Two charts - the first one showing total toy space over time; the second showing the relative development of endcaps and aisle caps devoted to toys [each side of an aisle cap is considered the equivalent of an endcap]. WalMart's expansion suggests that they are really very committed to the proposition that toys during the fourth quarter are essential to their overall competitive position whereas Target's approach seems to indicate that there are other departments [e.g. electronics] potentially more profitable during this holiday season. 10/30/2007 The World Federation of Consumer Organisations, Consumers International (CI) today announced Mattel as one of the winners of the International Bad Product Awards, to be presented at CI’s World Congress in Sydney, Australia, 29 Oct – 1 November 2007. According to the press release issued by Consumers International on 10/29 this year’s winners are:
Coca-Cola – for continuing the international marketing of its bottled water, Dasani, despite admitting it comes from the same sources as local tap water.
Kellogg’s – for the worldwide use of cartoon-type characters and product tie-ins aimed at children, despite high levels of sugar and salt in their food products.
Mattel – for stonewalling US congressional investigations and avoiding overall responsibility for the global recall of 21 million products.
With the overall prize going to:Takeda Pharmaceuticals – for taking advantage of poor US regulation and advertising sleeping pills to children, despite health warnings about pediatric use.
In the specific case of Mattel, this is what the press release said: Mattel recalled over 21 million toys from around the world over a five-week period in 2007, due to design faults and the use of poisonous levels of lead paint. The recall included one toy that contained over 200 times the amount of lead permitted by US lawmakers.Mattel CEO Robert Eckert was accused of stonewalling a US congressional investigation into the
safety of the company’s products, not acting on a request for access to the factories in question, and not allowing key Mattel staff to be interviewed by investigators.
While at first allowing China to take the blame for substandard production, in late September 2007 Mattel appeared to admit that some defects were actually a design fault of the company’s own making and that Mattel should be held responsible.The company later said that this apology had been ‘mischaracterised’ and that they were, in effect, only taking responsibility for around 11 million of the 21 million recalls.
CI's conclusion:
‘This is a classic case of avoiding accountability and shifting responsibility on a global scale. Wherever the fault lies, the safety of consumers was compromised and this should be the full focus of Mattel’s attention, not finger pointing and not blame dodging.’ Consumer International has 230 member organizations in 113 countries. Its total membership is not known but they claim to have 4.5 million members in the United States. 10/25/2007 The perfect storm is pummeling toy land. Yesterday morning, the NY Times ran a lead article in the Business Section castigating RC2 and the toy industry in general under the title "Lessons Thomas Still Could Learn On Safety". In this article they basically said that these recalls were not due to anybody's fault except that of the manufacturers who "due to carelessness or misplaced cost-cutting zeal did not make the effort to keep toys safe". Then Lou Dobbs weighed in later yesterday - again blaming the toy industry for abrogating their responsibility to the American consumer by outsourcing to the cheapest bidder, neglecting their jobs and totally disregarding the safety of the children. He added that he did not believe for a second the assurances by the manufacturer that the toys on the shelves now were safe and he predicted that we would see more recalls. Well, he was right. Today, we have yet another recall, Mattel's fourth [or rather fifth if you accept my contention that the recalls began with the Polly Pocket disaster late last year - scroll down to the 9/19 entry]. This time it is for 38,000 "Go Diego Go" toys, again for excessive levels of lead. This is happening as the industry gears up to what is probably going to be the worst toy season in a long while. I hear reports of buyers cutting back on POs because of much softer demand on the retail level. I hear from shopfloor assistants, who are part of my retailer panel, that consumers will rather not buy a toy than buy a Chinese-made one. I hear from retail store managers scrambling to do their regular jobs while engaged in an never-ending hassle to gather up and ship out recalled product. Add to this the housing crunch, rising gasoline prices, home heating costs that go through the roof, consumer confidence levels that are dropping like a rock - and you have the perfect storm. 10/15/2007 I just listened to the Mattel third-quarter webcast. A couple of things stand out: 1. They did better than I expected but there are a few flies in the ointment. One of them is the fact that they really did not have any sales growth if you back out the incremental Radica business. The second is that currency benefits from the weak dollar amounted to 4% on worldwide sales. In short, actual sales decreased by some 3%. 2. The jump in receivables from 70 days last year to 80 days this year suggests a very high percentage of third-quarter sales took place during the second half which is likely to result in higher than normal retail inventories going forward into the fourth quarter 3. There is a new TMX Elmo on the launch pad for middle of November. That strikes me as very odd and it smacks of a move that has not been planned for very long. You really do not put in a major product that late in the season. 4. Mr. Eckert mentioned good traffic for Barbie Girls. That is an accurate statement - web traffic jumped from 550,000 unique visitors in August to 720,000 visitors in September. This has not yet been reflected in store movement of the MP3 player underpinning Barbie Girls. 10/4/2007 I often get anonymous mail alerting me to happenings in the industry. I want to make my position clear on this. I protect all my sources of information, anonymous or otherwise, but equally, I validate all information that comes my way. The most recent such email related to a fashion doll manufacturer. I want to say to the writer that I cannot act on the information unless I am given more data which then allows me to check out the allegation to my satisfaction. 9/24/2007 What is behind the Mattel apology and what are the pitfalls that await them? I talked to a number of my friends in China - mostly business executives at Chinese toy manufacturers. This is their take on this: 1. The Chinese were genuinely appalled at the way they were blamed in these recalls. They felt that Mr. Eckert's testimony at two hearings was biased, self-serving and very unfair. I was told by several that "Mr. Eckert knew perfectly well what the facts of the case were and that he deliberately besmirched the Chinese people to save his own skin." As for my perception of the facts please scroll down to my entry dated 9/19/2007. 2. The Chinese Government, at the highest level, decided that they would give Mattel a clear choice - apologize or face so many safety tests on your products that you will be lucky if you can take delivery by about Easter. Mattel really did not have a choice in a situation where Christmas is just around the corner and 65% of their toys come from China. 3. Now Mr. Eckert has a problem because he said one thing to the American lawgivers and another thing to the Chinese Government. His solution sofar has been not to publish the text of the apology and to say that the newspaper reports "mischaracterized" what had been said. In fact, I am told that the Chinese anticipated something along these lines and this is why they, over Mattel's strenuous objections, insisted to have reporters attending the apology session. My friends suggest that Mr. Eckert will be well advised not to push this too far. If the Chinese authorities decide that he is, and I quote, "again playing fast and loose with the truth, they will retaliate most vigorously". And they do hold the bigger end of the stick. 9/21/2007 Mattel apologizes - well, I beat them by two days - see below! 9/19/2007 Bob Eckert just completed his testimony at the hearing held by the House Committee on Energy and Commerce on Protecting Children from lead-tainted imports. Interestingly, the PR release went out from Mattel about ten minutes before the hearing ended. This is what I heard: * There is great concern amongst the constituents of the House members on the panel that toys are just not safe for their children anymore. * The question of why Mattel chose to make their toys in China and not in the United States was repeatedly asked of Mr. Eckert. His response was basically that Mattel was operating internationally and all plants were under continuous scrutiny. In short, he sidestepped the question every time. * Mr Eckert expressed the hope that all toy manufacturers would be held to the same quality assurance standard now adopted by Mattel so as to ensure a level playing field. He also offered to share Mattel's expertise and experience in ensuring toy safety with competitors. * When asked whether he could guaranty that there would not be any further recalls, Mr. Eckert expressed the hope that there would not be any but added that testing was continuing and if they found the needle in the haystack then, yes, there would be another recall. I think Mr. Eckert's testimoney now and that a week ago was disingenuous and the questions by the House completely off the mark because nobody talked about the real reason why the vast majority of Mattel toys were recalled. There were four - not three - recalls. First Recall: 11/21/2006 4.4 million Polly Pocket Dolls and Accessories recalled because of loose magnets due to a faulty design by Mattel. According to WEB MD, this recall followed the hospitalization of three young children who reportedly swallowed more than one magnet from the recalled toys, creating holes in their intestines that required surgery. This recall happened on Mr. Eckert's watch and he must have been aware of a recall involving 4.4 million toys and three hospitalized children. Second Recall: 8/01/2007 967,000 toys under the Fisher Price label [Dora, Backpack, Perrito Figure Pack] recalled because their paint contained excessive amounts of lead. Third Recall: 8/14/2007 There are two parts to this recall. One was for 253,000 Sarge diecasts under the CAR licence where lead-containing paint was involved. The other was for 18.2 million units of certain dolls, figures, play sets and accessories - including Polly Pocket, Doggie Day Care, Batman and Barbie lines - again because of loose magnets. Fourth Recall 9/05/2007 This fourth recall included 675,000 Barbie playsets and about 99,000 assorted Fisher Price toys,again for lead-containing paint. What these numbers tell us is that of 24,594 million toys, only 2 million were recalled because a Chinese subcontractor diddled the books. The other 22.6 million toys were defective because of sloppy design by Mattel. I think that the paint-issue is understandable if not excusable. Chinese subcontractors, if squeezed hard enough, will to what they need to do to survive but it was Mattel's job to be sufficiently aware of the cultural and societal mandates obtaining in China to guard against this. What is not understandable and not excusable are the 91.8% of the recalls involving magnets. Not only was this entirely Mattel's fault but, more importantly, Mattel knew back in November last year that they had a problem with Polly Pocket dolls containing magnets. They did nothing for nine months and the had another recall caused by the same problem? Knowingly risking that the harm that befell children in the first recall could repeat itself? 9/12/2007 According to the Figaro newspaper, Mattel, Hasbro, Lego,ToysRUs, and others are being investigated for pricing collusion.The companies have received notice of this from the French equivalent of the Federal Trade Commission and have been given a mid December date when they have to appear before the commission. The most recent case in which price fixing was alleged involved Carrefour in the matter of Disney DVD pricing. Carrefour was found guilty and fined Euro 5.7 million or about $8 millon. 9/12/2007 The Senate hearing on toy safety concluded on the following remarks from the Chairman, Senator Dick Durbin: * China has failed - they let toxic materials be used in the manufacture of toys * The CPSC has failed - they did not execute their core mission * Congress has failed - in the race to get Government out of people's lives Congress forgot that there are instances where Government has a responsibility to act. Both Gerald Storch of ToysRUs and Robert Eckert of Mattel testified. It is my sense that particularly Mr. Storch did well. CPSC Acting Chairman Nancy Ford had a very hard time and I would not be surprised if we saw some changes there in the very near future. I believe that as a result of this hearing, Congress will push legislation designed to do the following things: 1. Considerably strengthen the resources of the CPSC and require it to significantly step up enforcement of safety laws 2. Require that all toy products be tested by independent laboratories and products be so certified 3. Sharply increase penalties imposed for transgressions against US safety laws 4. Require that product identification [batch numbers] be put on packaging and products The end effect will in my view be the following: - Yes, toys will be safer - Costs and hence prices will rise particularly on products sold by the smaller toy companies who have not had strong QC practices - In the long run, this will have a further consolidating effect on the toy industry in that this legislation will benefit the big manufacturers. A significant amount of discussion centered also on lead-containing jewelry and it was mentioned that an approximate 20% of all children's jewelry imported from China had unacceptable lead contents. I mentioned here on 7/20 that jewelry sold by Ganz [the makers of Webkinz] reportedly contained a high percentage of lead. We will undoubtedly see recalls for that category as well pretty soon. | |
|
|