Our household wishlist consists of some of the products from the table below. These companies are better known for their brands. It’s a handy table for parents to know where their money is going. It also begs the question can I make some money back from these companies?
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Hasbro
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Mattel
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Lego
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My little Pony
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Barbie
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Lego
|
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NERF
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Thomas the tank engine
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Lego
|
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Transformers
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Fisher Price
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Lego
|
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GI Joe
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Hot Wheels
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Lego
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Source: Company websites
What about me?
As an investor where is my Christmas
wishlist? Looking at the reports from the three rivals above by revenue Lego is the clear standout
with revenues growing much faster than peers with a base 3x larger than that of
rival Mattel which is slightly larger by revenue than Hasbro. Profits have also grown from 1,028 million Danish Kroner to 4,160 million over the past four years. Not too shabby for such a well known toy brand.
Lego fan, join the club
On average every person on Earth owns 80
pieces of Lego with all bricks being fully compatible from 1958 to now! (source
Lego). Apparently new launches account for 60% of their sales such as new lines
like Star Wars and other franchisee or movie tie-ins. The company did not skip
a beat during the global financial crisis as Lego was able to grow in the
world's largest toy market the US with Lego increasing its market share to 6%
by end of 2011 (source Lego Annual Report).
Unfortunately Lego is not listed, its
too profitable it doesn't need money from anyone else to grow! While an annual
report is available on the website it is still owned by the Kirk
Kristianseen family, passed down to a grandchild of the founder.
Who knows how to get to Sesame Street?
Seems like Mattel and Hasbro are left by default. Mattel has added the power brands of Thomas the Tank Engine and Bob the Builder in an acquisition from private equity in the past year. This purchase was motivated by the loss of the Seasame Street license to rival Hasbro 3 years ago. Hasbro starting from 2011 has the right to make Sesame Street merchandise for 10 years after a 15 year agreement with Mattel lapsed. Sesame Street is a nonprofit organisation.
It is a simple analysis but as a growth manager we are going with the faster grower. While not growing anywhere near as fast as Lego Mattel at 9.4% it has a superior growth rate compared to Hasbro 8.2%. Our Santa wishlist has to go with Barbie (Mattel) over Seasame Street as while it is one of the best known brands it is a license and not owned content (Hasbro). Mattel is faster growing and has a better range of more famous and relevant brands for kids.
Santa if I can't buy Lego shares can you please
just send a Lego car?
Source http://www.hongkiat.com/blog/35-lego-mega-constructions-you-probably-havent-seen-before/
Jason
Disclosure: Decisive has no position in
any of the companies mentioned.
The material in this article is for
informational purposes only and in no way constitutes a solicitation of
business or investment advice. The material has been prepared without regard to
any client's or other person's investment objectives. Before making an
investment decision you should consider the assistance of a financial adviser
and whether any investment or service is appropriate in light of your
particular investment needs.
