Spin Master has said a return to traditional toy sales seasonality, alongside retailers selling 2022 inventory and overstocks caused a dip in its first quarter figures for 2023.
But the company said it was on track for the rest of the year and its strategy was working, as well as looking forward to a second Paw Patrol film and more entertainment fare.
Unveiling the figures, global president and CEO Max Rangel said: “”Our first quarter performance was ahead of expectations and reflects encouraging entertainment and digital games performance. We saw continued pressure from excess toy inventory at retail and retailer caution, alongside the return of historical seasonality for Toy Gross Product Sales. As we continue to navigate the fluid environment, we remain confident in our strategy to reimagine everyday play, leveraging the power of our three creative centres to capture market share, deliver profitable growth and create long-term shareholder value. In 2023, we will bring breakthrough innovation to the toy aisle, alongside impressive launches within our core and licensed brand portfolios. Our investment in the creation of multi-platform content will be fully realized with the release of our most diverse entertainment slate to date, including the highly anticipated second PAW Patrol theatrical release and two new original series, which are expected to drive new licensing and merchandising opportunities. Finally, we will continue to expand our digital games ecosystem with several new digital games and gaming experiences designed to broaden our audience base, attracting kids of all ages and spawning new fans and player communities. Given our financial framework for value creation, the power of our three creative centres and our strong financial position, we are well-positioned to execute against our strategy, investing in innovation, geographic expansion and acquisitions to drive long-term profitable growth and maximize shareholder value.”
Chief financial officer Mark Segal said: “As expected, Toy Gross Product Sales in the first quarter of 2023 declined in comparison to 2022, amidst inventory clearance activities at retail arising from the carryover of inventory from Q4 2022 and challenging comps from movie-related launches in Q1 2022. We expect retail inventory headwinds to be over by the end of the second quarter. An anticipated shift back to more normal toy seasonal revenue patterns supports our expectation of strong year-over-year revenue growth in the second half of 2023. Our financial discipline and effective cost management, and solid entertainment and digital games performance, enabled us to generate strong Adjusted EBITDA of over $30 million for the quarter. Over the last five years our three creative centres have generated close to a billion dollars in Free Cash Flow, enabling us to execute on multiple strategic M&A transactions, innovative IP-driven growth, geographic expansion and investment in content and digital games, as well as enhancing total shareholder returns through the introduction of a dividend and a share repurchase program.”
The figures for the Q1, compared with 2022, showed a decrease in revenue of 36% down to $271.4 million, with toy revenue down 46.9% and digital games down 7%, offset by a 69.4% increase in entertainment.
