By William Bias - August 7, 2012 | Tickers: HAS, MAT | 0 Comments
William is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.
In a previous article I discussed the Perils of Nostalgic Investing in which affinity for a product such as Hasbros (NASDAQ: HAS) Transformers or Mattels (NASDAQ: MAT) Matchbox cars can lead to faulty assumptions that the company that makes these products must be a good investment. I noted that it is important to do ones research before taking the plunge.
I also noted that there were some opportunities for Hasbro with the then up and coming Battleship movie based on the popular game Battleship and the future release of G.I. Joe: Retaliation, which is based on the G.I. Joe toy line. When researching for this story, I decided that Hasbro and Mattel are suffering a slump brought on basically by being in between popular movies and the stronger dollar.
The Inter-Movie Slump
The first movie opportunity, Battleship, was not a blockbuster hit compared to The Avengers and The Dark Knight Rises. Hasbros consolidated net revenue declined 8% for the six months ending July 1, 2012. Hasbro did note an up-tick in the Battleship portion of its revenue during that time frame so the movie did some good in promoting sales of the game but probably not as well as anticipated.
The second opportunity I saw for Hasbro is the anticipated release of G.I. Joe: Retaliation. I thought this would generate interest in their G.I. Joe product line and thus boost consolidated revenues. However, at the last minute Paramount pictures decided to delay the release of the movie from June 2012 until March 2013 in order to convert the movie to 3D. This will extend a delay in the spike of interest in G.I. Joe products to well past the holiday season. The release of the latest Joe movie before the holidays would have created interest in the product in the summer season in addition to boosting the all important holiday sales.
Transformers sales have also declined as we move further away from Transformers: Dark of the Moon (2011) and wait for a new sequel to be made. Animated series such as Transformers Prime and Transformers: Animated do generate interim interest in the products, but dont do justice to going to a movie theater and seeing live action robots in 3D.
Mattel also saw a 1% decline in its consolidated revenue for the first half of 2012, mostly due to a decline in sales ofCars 2 revenue. As we move further from the Cars 2 release date the products associated with this movie are going to experience a natural decline. Mattel will need more movie licenses to boost its revenue.
The Other Products
The rest is here:
Anatomy of a Toy Slump
Recommendation and review posted by G. Smith
