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10/10/11(Mon)17:11 No.30447595SAN FRANCISCO (MarketWatch) — Toy maker sales this holiday season could be slowed by the unsteady economy and retailers reluctant to hold too much inventory, a longtime industry analyst predicted Monday.
In cutting his profit targets for Hasbro, Needham & Co. analyst Sean McGowan said the “mood among toy retailers has worsened” in recent weeks.
Toy makers have raised prices this year to cover increased manufacturing costs. At the same time, U.S. unemployment has stuck close to 9% and wage growth has been lackluster, pressuring family spending budgets.
“While we have long held the view that toy sales are relatively resilient even in tough economic climates, we now expect industry sales at retail to be flat vs. last year, and that shipments by manufacturers will likely be down,” McGowan wrote in a research report.
In 2010, U.S. retail sales of toys climbed 2% to $21.87 billion, according to researcher NPD Group. But Hasbro and Mattel MAT +3.81% ended the year with a small inventory build up.
McGowan cut his third-quarter profit estimate on Hasbro by 5% to $1.23 a share. For 2011, he shaved his forecast by 10 cents to $2.85 a share. And for 2012, he cut his target by 30 cents to $3.20 a share.
McGowan said he believes that Transformer and board game sales have lagged expectations. He further argued that television ratings for Hasbro’s cable network for kids, called the Hub, have been short of projections.
He cut his 12-month price target on Hasbro shares to $42 from $51 but kept his buy rating on the stock.
Hasbro and Mattel, the world’s two biggest toy makers, will be among the first S&P 500 companies to report earnings for the third quarter. |
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