March 8, 2022

TOY SCOUT REPORT, GERRICK JOHNSON, BMO CAPITAL MARKETS


Gerrick Johnson, Toy & Leisure Analyst for BMO Capital Markets, reports in his latest Toy Scout Report:


The top 15 privately held toy companies now account for 40% of all U.S. toy sales. The publicly held toy companies contribute 45%. That means that the hundreds of other toy companies together account for 15% of the market.


On average, the privately held companies he interviewed anticipate mid-double digit increases in 2022. Mattel expects to be up 10% to 12%, while Hasbro expects to grow low single digits


MY THOUGHTS


I think that the toy companies are being overly optimistic. Yes, we are hopefully seeing the last of coronavirus, but the Ukraine war, inflation, the cost of petroleum-based plastics, and continuing struggles with the supply chain will shadow the year. All of this will comprise a chaotic year. There is simply no way to predict what the Russian government will do, nor the effects of Mr. Putin's choices, both short and long-term.


I, therefore, anticipate that whatever increases the industry sees will be due to inflation. Once inflation is factored out, I predict the industry will be down mid-single digits.