Increase in sales over three weeks ending July 20 strong indicator for growth in second half of year
Port Washington, NY, August 1, 2019– Year-to-date through June, the total U.S. toy industry saw retail sales drop by $734 million, to $7.4 billion, a decline of 9 percent, according to The NPD Group. The decline, which was dragged down by unfavorable comparisons to the previous year, was largely a result of the Toys‟R”Us liquidation sale. Looking at the compounded annual growth rate (CAGR) from 2016 to 2019, which was up nearly 1 percent, paints a more accurate and favorable picture of the state of the industry.
To underscore the impact of Toys‟R”Us, drilling down into census regions shows the dichotomy between regions that were considered “Toys‟R”Us country” versus those that were not. For example, the Northeast region, which was overdeveloped for Toys‟R”Us, was the only region with a negative CAGR. All other regions posted a positive CAGR. The South, with a CAGR close to 2 percent, has recovered the fastest and has the lowest declines versus 2018 of any of the regions.
“January through June 2018 sales were up 7 percent due to the Toys‟R”Us liquidation that began in March and ended in June,” said Juli Lennett, vice president and industry advisor, Toys, The NPD Group.“This year, January through June 2019, we no longer have Toys‟R”Us stores or the incremental impact from the liquidation, resulting in a double hit to sales. In the next six months, however, we should see a complete reversal of the negative trends as we will see gains due to new sales compensating for the pantry loading from the liquidation as well as a reduction in the evaporation of toy sales due to the Toys‟R”Us closure.”
According to NPD, with the negative Toys‟R”Us comparisons no longer impacting current trends, as well as the anticipated positive effects of a strong slate of license-friendly movies in the second half of the year, the remainder of the year looks positive. The industry is already experiencing positive growth, with a 9 percent increase in sales over the latest three weeks ending July 20, 2019, versus the same time period in 2018.