3 Stocks to Watch From the Promising Toys & Games Industry – Yahoo Finance
The Zacks Toys – Games – Hobbies industry has been benefiting from smart toys, STEM toys (Science, Technology, Engineering and Math), sports toys, and fashion dolls and accessories. The industry participants have been undertaking efforts on the digital front and focusing on better execution of marketing and promotional initiatives to drive growth. The industry players, including Hasbro, Inc. HAS, Mattel, Inc. MAT and JAKKS Pacific, Inc. JAKK, are likely to gain from the aforementioned trends.
The Zacks Toys – Games – Hobbies industry comprises companies that design, manufacture and sell various games and toys. While traditional toymakers primarily focus on marketing and selling action figures, accessories, dolls, youth electronics and arts and crafts, other industry players develop and market content and services on video game consoles, personal computers and mobile. Some of the industry participants offer video game platforms, playing cards, Karuta and other products along with handheld and home console hardware systems and related software. A few companies also develop and operate retail and online military simulation games and provide multiplayer and single-player games.
3 Trends Shaping the Future of Zacks Toys – Games – Hobbies Industry
Robust Demand for Toys: Although the coronavirus pandemic hurt most industries, toymakers have gained from the same. The toy-buying spree continues across the country. Online sales of board games and building sets have been on the rise. Per the NPD Group, U.S. toys sales increased 16% and 13% in 2020 and 2021, respectively. In 2021, unit sales and average selling price (ASP) rose 8% and 4%, respectively. According to the NPD Group, the three-year compound annual growth rate for the period between 2018 and 2021 was 8%, primarily driven by ASP growth of 8%. Most toy companies are focusing on bolstering their online business. The industry is anticipated to perform robustly in 2022. Per the NPD Group, the U.S. toys industry increased 2% in the first half of 2022 to $11.4 billion.
STEM Toys Gaining Popularity: Amid declining sales of traditional toys, the robust demand for STEM toys has come as a breather. The Asia Pacific region has emerged as a major growth driver of STEM toys. Countries like India, Malaysia, Singapore and Thailand are witnessing rising demand for STEM toys. Parents are focusing more on educational toys to teach their children during the pandemic. Per a Technavio report, educational toy sales are likely to grow to $28.4 billion during 2021-2025, witnessing a CAGR of more than 14%. The APAC region is likely to contribute growth of 36%. The industry players have been capitalizing on new distribution methods, development of digital-play components, exploration of ventures with other industries, and focusing on international expansion to drive growth. The industry has enormous growth potential in China and Brazil as both countries have a massive population of kids aged zero to 14 years.
High Costs Remain Concerns: Cost inflation had a negative impact on the industry due to a rise in raw materials prices. Temporary store closures in some parts of the world, product shortages, lower retail inventories and supply chain disruption have been hurting the industry. Higher employee-related expenses are also hurting the industry. The companies have been resorting to product launches and shifting toward more technology-driven toys to boost sales, which might drive profits in the long haul. However, costs related to the initiatives may prove detrimental to the industry in the near term. Maintaining liquidity has become an arduous task for a number of industry participants in the current scenario.
Zacks Industry Rank Indicates Bright Prospects