Toy sales dip on China recalls, sluggish economy

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.

“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.

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.

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