Anticipation for ‘Star Wars’ helps sell Spin Master toys in third-quarter

TORONTO – Growing hype around the latest “Star Wars” film, coupled with widespread popularity of the “Paw Patrol” franchise with pre-schoolers, helped drive third-quarter sales higher at toymaker Spin Master Corp.

But profits still weakened as the Toronto-based company booked expenses from its initial public offering on the Toronto Stock Exchange in July.

Executives at Spin Master, which manufactures a range of toys and board games, told analysts Wednesday that it spent much of the summer preparing for the unveiling of its “Star Wars” toys.

The company is one of numerous international toymakers with licensing rights. Traditionally, all things “Star Wars” have been hot sellers with both kids and collectors.

Spin Master was part of an international product launch for the Disney-owned property that began in September and will lead up to the release of “Star Wars: Episode VII – The Force Awakens” next month.

“We have a great product line that generated very strong reception out of the gate,” said co-CEO Ronnen Harary in a conference call.

“Similar to other industry partners, sales paused after an initial strong surge but we expect sales to pick up again closer to the movie’s launch and as our fall media (advertising campaign) kicks in.”

Among the “Star Wars” toys Spin Master has on shelves is a 16-inch interactive Yoda figure with voice recognition as well as various remote-controlled versions of the Millennium Falcon and X-Wing Starfighter.

On Tuesday, Spin Master (TSX:TOY) reported net income fell 7.3 per cent to US$51.1 million from $55.1 million a year ago. The results included a stock-based compensation expense of $43.4 million.

Adjusted earnings, which filter out the IPO costs, rose 32.3 per cent to $74.1 million from $56 million a year earlier.

Revenue grew 31.7 per cent to US$386.8 million from US$293.8 million.

The company reported that the “Paw Patrol” toys, based on the Nickelodeon show, helped sales in the “pre-school and girls” segment of the business soar 71.7 per cent to $131.9 million from a year ago.

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