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Toy sales dip on China recalls, sluggish economy

From Reuters

U.S. toy sales fell slightly in 2007 as the industry suffered from negative publicity surrounding the recall of millions of Chinese-made playthings and a weakening economy, according to data released Tuesday by market research firm NPD Group.

U.S. toy sales fell about 2% to $22.1 billion from $22.6 billion in 2006. The biggest declines came in dolls at 8%, while sales in the infant and preschool category and the outdoor and sports category each fell 5%.

Two years ago, the infant and preschool category was the strongest performer, snagging nearly 15% of market share.

The toy industry was already hard-pressed to duplicate a surprisingly strong 2006, and growing financial strains on consumers compounded the issue of children increasingly abandoning toys for electronics such as MP3 players, cellphones and video games, Needham & Co. analyst Sean McGowan said.

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“Although toy sales are typically more resilient in uncertain economic times than other categories, the reality is that consumers face a wide and growing number of challenges,” he said.

Industry leader Mattel Inc. and rival Hasbro Inc. each saw some weakness in their domestic results despite posting better-than-expected fourth-quarter profits.

Last month, El Segundo-based Mattel, which recalled millions of toys last year due to safety concerns and lead paint, said its gross U.S. sales fell 3%.

Pawtucket, R.I.-based Hasbro, the second-largest U.S. toy maker, said Monday that operating profit at its North American segment fell 22% during the quarter.

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NPD, meanwhile, said action figure sales climbed 8% last year, boosted in large part by toys tied to the blockbuster films “Transformers” and “Spider-Man 3.”

Burbank-based Walt Disney Co.'s Hannah Montana; Hasbro’s Spider-Man and Transformers; and Webkinz and Air Hogs were the toy properties with the greatest growth for the year, NPD said.

Licensed toys generated 27% of the industry’s sales in 2007.

Strong demand for Webkinz -- a plush animal toy that comes alive online -- helped drive sales of toys tied to the Internet up 9% last year.

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The category generated 7% of industry sales in 2007, according to NPD.


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