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Disney US holiday toys focus on 'Cars' and 'Pirates'
Thu Oct 5, 2006 5:34pm ET
LOS ANGELES, Oct 5 (Reuters) - Buoyed by a healthier toy industry and its popular "Cars" and "Pirates of the Caribbean" movies, Walt Disney Co's consumer products unit should enjoy a better holiday season than last year, analysts said.
Disney products generated an estimated $23 billion in retail sales this fiscal year ended in September, with more than 40 percent coming in October, November and December.
Disney, as licensor, gets a piece of the sales, which one analyst who declined to be named estimated at a high single-digit percentage. A Disney spokeswoman said it uses a variety of licensing structures and royalty breakdowns.
Coupled with the appeal of its "Little Mermaids" franchise, Disney's "Cars" and "Pirates" products should bring Disney a profitable quarter, analysts said, after a difficult holiday period for the entire toy industry in 2005.
Indeed, U.S. toy sales fell 4 percent in 2005, with toy makers hurt by higher costs, intense competition and store closings. At Disney, that meant just a 1 percent increase in consumer products revenue during last year's holiday quarter.
"They did okay last year. But they have the number one and two movies for toys this year with 'Cars' and 'Pirates'," independent toy analyst Chris Byrne said. "This is going to do very well,"
The DVD releases next month of "Cars" and "Pirates" are designed to boost sales for the franchises, which Byrne said "are going to be around for years to come."
He added: "They will be among the strongest licensed goods for this year.
Not only does Disney have a strong crop of toys this year, analysts said, but the industry itself appears to be in better shape than in 2005.
"I think it's going to be a very strong year. The industry is very robust," Byrne said.
Another analyst, Wedbush Morgan's Sean McGowan, also forecast a better year for the toy industry. "I think consumers are feeling better about their disposable income ... I think this year's going to be up a bit."
He, too, said the new offerings should fare better than what Disney had on store shelves a year ago. "I think the 'Cars' and 'Pirates' stuff is above what they had last year, and 'Princesses' too," McGowan said.
Even so, one retail analyst warned that the "Cars" and "Pirates" lines, which have been selling since the summer, may not find that many new buyers.
"We are not sure how much of a repeat business these franchises can help Disney generate, and think that incremental sales volume generated from new customers may not be enough to justify such a significant inventory investment in these two properties," J.P. Morgan analyst Brian Tunick said in research note.
Along with "Pirates" and "Cars," Disney's key 2006 franchises are Disney Princesses, featuring Ariel from "The Little Mermaid", Power Rangers, and Winnie the Pooh and Mickey Mouse Clubhouse toys.
The marquee items include the "Pirates" Ultimate Black Pearl pirate ship for $49.99, the "Cars" TV/DVD player for $159.99 and the "Little Mermaid" hair salon for $69.99.
Disney is also giving special treatment to Fairies, a line of collectible dolls and accessories aimed at tween girls. It hopes to appeal to older children with new designs for its Mix Stick MP3 players and portable video player Mix Max.
Wedbush Morgan's McGowan said that although classic Disney toys like Mickey Mouse are "not as dominant" a in years past, its newer lines will make up the slack.
Thu Oct 5, 2006 5:34pm ET
LOS ANGELES, Oct 5 (Reuters) - Buoyed by a healthier toy industry and its popular "Cars" and "Pirates of the Caribbean" movies, Walt Disney Co's consumer products unit should enjoy a better holiday season than last year, analysts said.
Disney products generated an estimated $23 billion in retail sales this fiscal year ended in September, with more than 40 percent coming in October, November and December.
Disney, as licensor, gets a piece of the sales, which one analyst who declined to be named estimated at a high single-digit percentage. A Disney spokeswoman said it uses a variety of licensing structures and royalty breakdowns.
Coupled with the appeal of its "Little Mermaids" franchise, Disney's "Cars" and "Pirates" products should bring Disney a profitable quarter, analysts said, after a difficult holiday period for the entire toy industry in 2005.
Indeed, U.S. toy sales fell 4 percent in 2005, with toy makers hurt by higher costs, intense competition and store closings. At Disney, that meant just a 1 percent increase in consumer products revenue during last year's holiday quarter.
"They did okay last year. But they have the number one and two movies for toys this year with 'Cars' and 'Pirates'," independent toy analyst Chris Byrne said. "This is going to do very well,"
The DVD releases next month of "Cars" and "Pirates" are designed to boost sales for the franchises, which Byrne said "are going to be around for years to come."
He added: "They will be among the strongest licensed goods for this year.
Not only does Disney have a strong crop of toys this year, analysts said, but the industry itself appears to be in better shape than in 2005.
"I think it's going to be a very strong year. The industry is very robust," Byrne said.
Another analyst, Wedbush Morgan's Sean McGowan, also forecast a better year for the toy industry. "I think consumers are feeling better about their disposable income ... I think this year's going to be up a bit."
He, too, said the new offerings should fare better than what Disney had on store shelves a year ago. "I think the 'Cars' and 'Pirates' stuff is above what they had last year, and 'Princesses' too," McGowan said.
Even so, one retail analyst warned that the "Cars" and "Pirates" lines, which have been selling since the summer, may not find that many new buyers.
"We are not sure how much of a repeat business these franchises can help Disney generate, and think that incremental sales volume generated from new customers may not be enough to justify such a significant inventory investment in these two properties," J.P. Morgan analyst Brian Tunick said in research note.
Along with "Pirates" and "Cars," Disney's key 2006 franchises are Disney Princesses, featuring Ariel from "The Little Mermaid", Power Rangers, and Winnie the Pooh and Mickey Mouse Clubhouse toys.
The marquee items include the "Pirates" Ultimate Black Pearl pirate ship for $49.99, the "Cars" TV/DVD player for $159.99 and the "Little Mermaid" hair salon for $69.99.
Disney is also giving special treatment to Fairies, a line of collectible dolls and accessories aimed at tween girls. It hopes to appeal to older children with new designs for its Mix Stick MP3 players and portable video player Mix Max.
Wedbush Morgan's McGowan said that although classic Disney toys like Mickey Mouse are "not as dominant" a in years past, its newer lines will make up the slack.
