5/11/2010 - Zapf Creation, part of MGA Entertainment, has just published its first quarter result:

 Consolidated revenue was € 11.9 million up 12.4% (2009: € 10.6 million) with the net loss halved to Euro 2..4 million from last year's Euro 4.9 million.

4/4/2010 - Lionel said "no" and Maerklin is frantically looking for a white knight with deep pockets. The problem basically is that Maerklin sat too long on its laurels and lost market share every year for the past decade of so.

2/25/2010 - Maerklin is now in play. There are a number of companies that are viewing the company with a view to acquiring it but Lionel is probably the leading contender.

01/16/2010 - Maerklin, in Germany's equivalent of Chapter 11 since end of March last year, has stabilized. This shows in both sales for the fiscal year that ended on December 31, 2009 - Euro 110 million - as well as a positive EBITDA.  

12/7/2009 - http://watch.bnn.ca/#clip243538 - Interview on Canadian Television Business News Network - Analysis of top toys as well as of Spinmaster and Mega.

11/17/2009 - The German toy market is probably the only one amongst European and North American countries to show growth. It is estimated to grow by 3% to Euro 2.36 billion [or US$ 3.5 billion] this year. In contrast, the video game market is flat at Euro1.94 billion [or about $2.9 billion]. It is expected that each German child gets presents worth Euro 240 [or about $360] this Christmas,

10/14/2009 - 98% of all German boys and girls between the ages of 6 to 16 years know Barbie. Chancellor Angela Merkel is however known to only 64% of all the kids and foreign minister Frank Walter Steinmeier registers only at 29%. This is the result of a research piece conducted with 1054 German children in the ages between 6 and 16 years old by myToys.de G.m.b.H., Germany's leading online retailer in the young family's segment.  

08/15/2009 - MGA's Zapf Creation continues to lose sales and profits. Sales for the June quarter dropped to Euro 19.6 million from Euro 24.4 million a year ago [US$27.5 million this year versus US$38.0 million last year]. Losses increased from last year's Euro 5.6 million [US$8.8 million] to now Euro 9.1 million [US$ 12.8 million].

07/17/2009 - Vivid Toy Group, the UK's third largest toy company [after Mattel and Hasbro] has just established a foothold in Germany. Vivid Deutschland G.m.b.H. will begin operations on September 1, focusing on developing Crayola as well as a host of new licenses.

05/25/2009 - Barbie is winning which is a function of the very successful PR campaign around Barbie's 50th birthday. This is demonstrated not only by shelf space changes and accelereated sell-through but also by web traffic and blog intensity metrics:

First, overall Barbie versus Bratz web traffic comparison:

Barbie is clearly winning.

Secondly, webtraffic of the five major doll brands:

What surprises is the strength of American Girl, a brand that has been doing very well lately. Barbie is holding its own and everybody else is in the pits.

Thirdly, Blog metrics which indicate consumer interest levels:

Again, American Girl surprises. Barbie and HSM are holding their own whereas Hannah Montana has been declining over the past 45 days. Bratz is barely surviving. Note that Barbie's peak in March coincided with the doll's 50th birthday.

04/02/2009 - Easter is a big deal in Europe. Parents spend an average of Euro 46 [$65] per child. This was the result of a research piece carried out by Mytoys with 1026 parents of children below 16 years of age. This expenditure varies depending on the age of the parents. Those below 40 years of age only spend only Euro42 while those above 40 spend Euro 51 per child. While the consumers have not lost their optimism, they nevertheless are exercising greater caution. While last year, most of the expenditure was on toys, this is now much less the case and school materials and clothing now find their way into the Easter presents scene. 

03/02/2009 - ToysRUs is selling its 17 stores in Holland. The buyer is Speelhoorn, a major player in the Dutch toy scene. The 17 stores will be renamed Toys XL,.

2/10/2009 - Webkinz is moving over to mass - they just got an endcap at Target. All indicators are that Webkinz has slowed down significantly at Specialty. Also, my friends there report that inventories are extremely high and growing. Apparently, Ganz is trying to combat their flagging sales by forcing their declinging universe of specialty retailers to take larger minimum quantities which, of course, accelerates the inventory build-up and the retailer desertion rate.

1212/2008 - Zapf, MGA's European crown jewel, is again faltering. They just revised their guidance for the year, indicating that sluggish demand would result in negative growth rates and a operational loss for the year. This comes on top of the disastrous decision by the judge in charge of the Barbie vs Bratz case to order MGA to cease producing their iconic dolls.

11/7/2008 - This is how Bryan Ellis, chairman of Toy Industries Europe, sees the toy scene in Europe for 2008:

* Toy industry chief sees 1-2 percent sales growth in 2008

10/16/2008

A friend who is very tuned into the European toy space, has just sent me the following round-up what is going on over-there:

" I suspect that the toy markets in the whole of Europe are likely to be down on last year, by probably 5% or more, and that is before adjusting for inflation. Fear of unemployment , and the relentless media emphasis on the banking crisis and the incipient recession is making everyone depressed and cautious in both business and personal expenditure. In the UK owner occupiership of homes is over 70%, so declining house values makes most people feel poorer, which affects expenditure. A few toy companies are doing well. Hasbro in the UK is doing very well, with a new BBC license 'In the Night Garden'. Hasbro UK will have sales of around £210 million this year. Lego is having a good year everywhere, and Spinmaster is doing very well with Bakugan. MGA is doing very poorly in UK and Germany. I think the next 12 months will see a lot of closures of retail chains and of toy suppliers.

The fashion doll category has gone down this year in many markets. Bratz is now sold by MGA in the UK and sales are probably half or less what they were last year, but I believe Barbie is also down. In Germany Bratz has failed for a third time, this time distributed by MGA itself. The managing director left recently. He was previously the sales director of Mattel Germany"

9/2/2008

Update on the story below. No replacement will be named. Economy measure!

8/9/2008

Update on the story below. Axel Dietz is leaving Maerklin as of the end of this year. No replacement has sofar been named.

8/5/2008

Rumors are rife that Maerklin, the famed German train manufacturer, is again for sale, a mere two years after having been acquired by Kingsbridge Capital. Rumors also have it that Axel Dietz, the CEO, is being handed his termination papers. Kingsbridge strenuously denies any intention of divesting Maerklin but has no comments on the comings or goings of Mr. Dietz.

7/15/2008

Toys are not doing well at retail. My retailer panel reported a year-on-year drop of 5% up to May for toys. June was better - sales for the month were down only 2% versus June last year. The retailer managers in my panel attribute this to the stimulus checks and think that this is a one-time improvement only.

In the UK, things are not much better. According to the RetailBulletin,
'UK retail sales values fell 0.4% on a like-for-like basis, compared with June 2007."  My friends at Tesco tell me that toys did much worse - down about 5% for the month.

Looking further out, things do not look very promising.

5/30/2008

Lego goes virtual.

About 100 highly skilled programmers employed by Lego in Denmark and the US are working on establishing the Lego Universe - a virtual Lego construction site scheduled to be unveiled for Christmas next year. This site will allow children from the age of five years get to know each other, to work together and to solve tasks and to play games. The two first projects for the kids are building a virtual Lego city and a virtual Lego castle.

This is a natural extension of the Lego Club which already has worldwide more than four million members from the age of five upwards.

This move into the virtual world by Lego is prompted by two very specific reasons. One is that online gaming - massively multiplayer online role playing or MMORP in short - is skyrocketing but is at this point characterized by very violent fantasy games such as World of Warcraft and Age of Conan. By offering a non-violent alternative to the  very young, Lego hopes to establish itself as the first to bring toys to the MMORP space. The second is that moving the Lego club members into the virtual world will allow rapid and continuous expansion of the Lego Club membership and hence an overall expansion of the Lego consumer basel

4/27/2008

The 2008 film season is nearly upon us and I thought it timely to update the chart further below [12/29/2007]. Given that we now know much more of the likely shape of these movies, I also asked the buyers to revisit their ratings in terms of toy effectiveness. At the same time, I checked what the blog intensity metrics had to say  since these are a pretty good indicator of consumer interest levels.

First, the Chart:

Secondly, the blog metrics. I listed these in sequence of release timing - the first three first, and so on. When looking at these metrics it is useful to remember that

the further the timing is out, the lower the metrics are likely to be. Secondy, the scale on the left is not identical or all three - it adapts to the hight of the highest curve:

These graphs suggest that Batman is pretty much up there with the two movies rated as very high - Star

Wars and Harry Potter. Indiana Jones is gaining in strength whereas The Incredible Hulk is much lower than

what the buyers believe. Lastly,Iron Man is very strong, Kung Fu Panda very weak, and Prince Caspian is 

struggling.

12/29/2007

I spoke to a few toy buyers at large box stores and asked them to rate the 2008 movies in terms of their toy license effectiveness. This is what they came up with:

Please note that there will also be TV serials released for Iron Man and Hulk in October 2008. Hasbro has the licenses for both as well. These serials will lend strength and stamina to the toys released earlier in the context of the

main movies.

There is a question mark surrounding the toy license for the 2008 Harry Potter movie. NECA and Cards Inc were the licensees for the most recent release but there are rumors to the effect that they might not be reappointed. Correction: NECA confirms that they and Cards Inc are indeed the licensees for toys. Mattel has the license for the "Make Scene" game only.

12/19/2007

We all now know that the internet has become one of the only positive drivers of the toy scene this year. I took one look at the most prominent virtual playsets which are totally dependent on web traffic.

I first considered the known leaders - Club Penguin [recently bought by Disney], Barbie Girls [which are, according to Bob Eckert's statements, Barbie's way to reverse the KGOY trend], Webkinz [which were the subject of great debate recently] and Neopets [Jakks' latest licence].

Neopets is flat, ClubPenguin is up by nearly 60%, Webkinz has quintupled, and Barbie Girls stalled after a very promising start.

I then looked at the second-tier brands - Be-Bratz, Shining Stars and Disney's VMK. Be-Bratz does not yet look like a major challenge to Barbie Girls; Shining Star continues to get traction, and Disney's VMK is nowhere.

10/16/2007

MGA's Autumn of Discontent continues:

The French toy manufacturer Smoby-Majorette, previously acquired by MGA, was again placed in receivership by the French Courts in line with a  request from the side of the prosecutor who had suggested that the buyer, MGA Entertainment, "was unable to present a viable backup plan."  MGA had acquired the company for a symbolic euro following a safeguard procedure [equivalent to Chapter 11] imposed on March 19. Smoby - which employs 2,750 employees worldwide including 1,300 in France - was brought to its knees by a debt of 215 million Euros. Today this debt exceeds Euros 270 million [US$ 382 million]. MGA was supposed to discharge these liabilities - see commentary below of 10/4/2007 - having acquired 56.5% of Smoby's capital and 70.53% of the voting rights for the one Euro mentioned above.

This is the French text of the announcement by Le Monde on 10/11/2007;

Le fabricant de jouets Smoby-Majorette a été placé en redressement judiciaire par le tribunal de commerce de Lons-le-Saunier (Jura), mardi 9 octobre. Il a suivi les réquisitions du procureur qui avait estimé que le repreneur MGA Entertainment « n'était pas en mesure de présenter un plan de sauvegarde viable ». L'américain MGA avait repris l'entreprise pour un euro symbolique dans le cadre d'une procédure de sauvegarde prononcée le 19 mars. Smoby - qui emploie 2 750 salariés dans le monde dont 1 300 en France -, était alors asphyxié par une dette de 215 millions d'euros pour 58 millions de fonds propres. Celle-ci dépasse maintenant les 270 millions. MGA était censé apurer le passif.

I cannot find any commentary to this on MGA's website.

10/4/2007

MGA's Autumn of Discontent:

Mr. Larian is not a particularly happy camper. Things are not going that well for him in Europe. He is under investigation for insider-trading by Germany's

equivalent of the SEC. Smoby, his French acquisition, is under investigation of France's equivalent of the FTC for pricefixing. He also just now bailed out Smoby to the tune of Euro 12 million [US$16.8] and is said to have guaranteed the Smoby creditors that he would repay over the next ten years debts to the tune of Euro 267.7 million [US$374.7 million].

His anti-Barbie campaign in Germany - the center piece in his anti-Mattel strategy for Europe -  hit a stone wall inspite of very heavy investments in people and money. More importantly,  Zapf, the jewel of his European crown, is struggling. According to financials published today, they showed a sales loss of 28% in the first half of this year, from Euro 31,026 [US$43,4 million] last year to Euro 22,361 [US$31,3] this year, Their gross margin dived from 45.5% down to 40.1%, and their Ebitda went from a loss last year of Euro 4 million [$5.6 million] to this year's loss of Euro 6.4 million [US$8.9 million].

On this side of the pond, things appear not to go much better. Firstly, my retailer panel tells me that Barbie has fought Bratz to a standstill. Secondly, Mattel is beating MGA hands down in the merchandising [endcap] stakes. Thirdly, the Bratz movie [which was supposed to reduce Barbie to sack cloth and ashes] was a resounding flop. And finally, MGA after a promising start into the virtual world seems to be faltering there, too. This is what the latest web traffic numbers of Alexa show - and if the virtual world is not about web traffic, what is?

07/25/2009 -Brio continues to do well. After a sales increase of 15% last year they now have added another 22% during the first half of 2009.  

06/25/2009 -  «Bakugan Battle Brawlers», the toy hit in the US and Japan, ia also doing exceptionally well in Germany. Introduced in March 2009, Bakugan now occupies the top 3 action figure positions in Germany according to NPD - to wit  the «Bakugan Starter Pack», the «Bakugan Booster Pack» and the «Bakugan Battle Pack». 

11/9/2008 - Zapf is starting to revive. They have begun to show not only sales growth but now also profit generation. Specifically, they increased sales in the first nine months of this year by 9.3% to Euro 63 million [US$78 million] and EBIT from a marginal loss last year to a plus number of Euro 3.5 million this year. This must come as good news to MGA Entertainment who own Zapf - and MGA has not had too many good news this year.  But there is also an irony - Thomas Pfau, the Zapf CEO who made this happen, upped and left for greener pastures just a few weeks ago.

8/15/2008

Familie&Co [Germany's equivalent to the Family Fun Magazine] has just picked its toys of the year for 2008 together with a panel compoused

of parents, teachers and child psychologists. Winners were

For the smallest guys -       Greifling's Pirate by Heimess

Play and Science -             Pyramid by Playmobil

Close to a Child's Heart -   Animal Clinic by Playmobil

For Artists and Builders  -   Moov by Berg Toys

For the whole Family -        Uno Flash by Mattel

8/15/2008

Playmobil has now sold more than 21 billion of its little men -

three for each person on the globe. If you put them in a row, the

chain would stretch 2 1/2 times around the world.

01/12/2008

The internet is becoming the channel of choice for the younger and more affluent consumers for their Christmas gift shopping.

According to a Gallup poll conducted among 1024 adults between November 2 -4, the percentage of adults saying that they intend to use the internet for their Christmas shopping has surged to 49%. This is up from 39% in 2004.

Those in higher income households [$70k and up] are substantially more likely than the lower income levels to shop the internet. Age also plays a role - below 55 year olds are much more likely than older age groups to shop through the internet. There has been a 20 point increase since 2004 in expressed intention to use the internet for gift shopping by the age group below 55 years and an 8 point increase in the older age groups.

How are then the various toy companies doing as far as their websites are concerned?

First, the two big companies - Hasbro and Mattel. The spike in Mattel's traffic patterns is due to recall-related consumer enquiries. Mattel's picture suggests two things - the recall issue is receding as an issue requiring action from the side of consumers and the company continues to badly trail Hasbro. Hasbro, in contrast, is moving up strongly.

Then the secondary companies [whose traffic pattern would be dwarfed if  displayed on the same chart with Hasbro and Mattel]:

This suggests that all three, with the possible exception of Bandai, still have ways to go. The spike for RC2 is again a result of recall action. MGA is the only one showing a distinct downward trend.

Other than the web, the channels doing best in terms of Christmas gift purchase intentions are department stores and discount stores. For the former, 83% [up from 77%] of all polled adults said they would shop there whereas discount stores racked up 77% [up from 72%] of all responses. There was a bias in favor of discount stores from respondents earning less than $75k per year.

09/09/2007

 LEAPFROG IS STABILIZING

This is the first time in about 3 years when I report something other than doom and gloom for LF. My contacts and sources with the three key retailers suggest that LF is turning the corner. There is another aspect to this - I think the toy recalls and the resulting aversion to Chinese made toys will in fact benefit both LeapFrog and VTech at least as far as their electronics are concerned. In summary:

* In terms of shelf space, LF is maintaining parity with VSmile in all three major retailers

* In terms of new product development, buyers had a very interesting and positive observation for LF but also sounded a note of caution.

For the first week of September, LF compares to VSmile in sales as follows:

In Amazon, LF has 37 products in the top 50; VSmile 17 and Fisher Price 5 In ToysRUs, LF has 16 products within the top 48, VSmile 17 and Fisher Price 5

In my toy retailer panel, LF had 5 out of the top 10, VSmile 4 and Fisher Price 1

In Specialty, VSmile had 1 product amongst the top 10, LF and Fisher Price none.

LeapFrog has an overpowering lead in Blog Intensity which indicates overall interest. In terms of webtraffic, which denotes purchase interest, LF also leads strongly.