Toy manufacturer Tomy Co. Ltd., producer of Transformers- and John Deere-branded merchandise, among others, reported calendar second-quarter (fiscal first-quarter) revenue that fell by 21.0% year over year and missed analysts' estimates by 13.5%, according to S&P Global Market Intelligence data. Tomy also published guidance for the full year to March 31, 2021, for revenue to drop by 12.0%, which was also 6.4% points worse than expectations. The company's stock price dropped 5.4% on the day following the publication of the results.
While the majority of Tomy's sales are in Japan, its second-largest market is North America. Panjiva's data shows that U.S. seaborne imports linked to Tomy were unchanged in the second quarter compared to a year earlier, including an 11.1% rise in toys and a 27.2% drop in non-toy merchandise.
The increase in toy shipments may have led to a surge in inventories — indeed at the group level, the company's inventory days increased to 87.3 in the latest quarter compared to 68.6 a year earlier. Inventory management can be a key differentiator of success for toy manufacturers, as flagged in Panjiva's research of July 27.
There are signs that Tomy is cutting shipments to manage inventory at the start of the third quarter, with total imports down by 23.7%, including a 19.3% decline in shipments of toys. Indeed, many other larger toymakers are following suit, with shipments linked to Mattel Inc. and Hasbro Inc. having fallen by 39.4% and 16.5% year over year, respectively, in July.
Among the smaller, more brand-focused suppliers, there was a 55.0% cut in imports linked to Funko Inc. and a 24.2% drop in shipments linked to Spin Master Corp., ending the latter's extended growth.
The outliers have been WowWee USA Inc. and JAKKS Pacific Inc. with growth of 16.8% and 8.2%, respectively, though both had cut shipments in the second quarter and so may have had more manageable inventory positions to start with.
Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.