Shop Talk

Retailers, consumers and prices

Check Out Line: Toy shares still best bet?

July 13, 2009

RETAIL-BLACKFRIDAY/Check Out this analyst’s view on the toy sector.

Tim Conder, an analyst with Wells Fargo Securities, said toy shares continue to offer the best “risk/reward” as those in his coverage, like Mattel, Hasbro and RC2 Corp, continue to gain relative market share.

“Despite on-going consolidation among retailers and investor concern about growing major retailer ‘clout’  via pricing pressure and private label toys, major toy manufacturers have gained share. Why?” Conder asked in his note.

The answer could be –  ”(1) Financial staying power, (2) Uninterrupted supply chains while 2nd/3rd tier vendors had issues during the peak of the credit freeze, (3) Licensed/owned brands that major retailers need to draw consumers (e.g., Barbie, Transformers, Star Wars, Spiderman, Thomas & Friends, Sesame Street, John Deere), and (4) Dependable consistency to deliver globally as major retailers expand,” Conder said.

Conder’s positive take on toy makers comes ahead of major earnings reports that begin this week with No. 1 toy maker Mattel, followed by rival Hasbro early next week.

Also in the basket:

Vodka maker CEDC to offer 5.5 mln common shares

Philips sees early signs of recovery, boosting shares

Japan’s Suntory considering merger with Kirin

Kellwood continues to negotiate upcoming maturity

Trade group challenges Wal-Mart on health care (WSJ - subscription required)


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