Since 80% of American consumers' now believe we're in a recession , it's
white-knuckle time for the retail industry, which desperately needs strong
holiday sales. But while Scrooge may haunt the hopes of many Christmas presents,
one sector has proven itself resilient in bad times: toys. And thats good news
for big manufacturers like Mattel (NASDAQ: MAT ) and Hasbro (NASDAQ: HAS ) this
holiday season. Make no mistake, it's looking pretty grim for retail in
general: Industry research firm ShopperTrak on Wednesday predicted November and
December sales will rise only 3% down from last year's 4.1%. But parents
traditionally have been willing to sacrifice for their kids, so toy sales fared
better than the rest of the retail industry during the recession. HAS and MAT
have been forced to increase prices this year to offset higher production and
raw materials costs, which could encounter resistance from consumers. So which
company is best positioned to win the starring role in this season's toy
story? Recent Earnings Mattel's second-quarter earnings increased 56% to $80.5
million. MAT, which next reports earnings on Oct. 14, grew sales by 14% to $1.16
billion. Barbie sales alone rose 12%, while Hot Wheels sales slipped 2%.
Hasbro's second-quarter earnings were up 33% to $58.1 million. HAS, which next
reports earnings on Oct. 17, grew sales by 23% to $908.5 million. Driven by
Transformers, boys' toy sales rose 96% to $406.4 million, while girls toy
sales declined 11% to $119.1 million. Girls vs. Boys Barbie might be 52, but she
still reigns as Mattel's prom queen, helping MAT post its greatest
second-quarter growth in more than 10 years: 12%. The company's entire girls
portfolio is dominant, particularly Disney Princess and Monster High. Mattel's
tie-in with Disney/Pixar's Cars 2 is so far outperforming Toy Story 3 .
Hasbro's boys brands lead the pack with Paramount's Transformers: Dark of
the Moon . Beyblade, Marvel and Tonka also are performing well. HAS also
reinvented My Little Pony with its "Friendship is Magic" series last year.
One big concern: The company's game and puzzle revenues are down and HAS still
is clearing out 2010 inventory.
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