Toy Makers Gear Up for Holiday Sales as Inflation Dents Consumer Spending
2022.08.19 21:14
Toy Makers Gear Up for Holiday Sales as Inflation Dents Consumer Spending
Budrigannews.com – Toy makers are heading into the holiday season hoping to keep sales momentum going despite inflation that is forcing many households to hold back on nonessential shopping.
Sales surged during the pandemic as parents tried to occupy bored, stuck-at-home kids. But whether that can be sustained is a key question.
The holidays are expected to generate $1.3 trillion in retail sales overall, a 3.3% gain from last year, according to e-commerce site Zulily. But sales of toys and games are expected to decline 15% in 2022, according to Freedonia Group, which compares with a 40% surge in 2021.
Some analysts are optimistic, however. Bank of America reinstated coverage of Hasbro Inc (NASDAQ:HAS) with a buy rating and a $96 price target, and started coverage of Mattel Inc (NASDAQ:MAT) with a buy rating and $31 price target.
Both companies are gearing up for the holidays. Bank of America said it expects toy spending to hold up well despite inflation that is eating up more of shoppers’ disposable income.
Hasbro will roll out action figures to coincide with the release of upcoming movies, including the next installments of Black Panther and Ant Man. It’s also coming out with a set for Dungeons and Dragons fans. Mattel recently tied up an agreement with SpaceX to make space-inspired toys under its Matchbox brand.
Retailers could see fierce competition in the toy category as sellers such as Walmart Inc (NYSE:WMT) recently slashed prices to clear inventory. Macy’s Inc (NYSE:M) is opening Toys R Us stores within its stores in nine states this fall.
Shares of Hasbro are up 0.2% on Friday but down 18.7% for the year so far. Shares of Mattel are down 0.2% for the day but up 11.5% this year. Bank of America’s price targets imply upside of 16% and 29%, respectively.
