According to Linda Bolton Weiser, managing director at D.A. Davidson & Co., the recent holiday season saw some interesting trends in the toy and beauty industries.
Toy Story: Weiser said Wednesday on Benzinga’s “Stock Market Movers” that opposite to the 2021 holiday season when there were supply chain disruptions resulting in a widespread shortage of toys, the 2022 season was bustling with inventory.
D.A. Davidson conducts a proprietary Choice survey every year around Christmas, looking at the pricing and availability of key “hot” toys at different retailers.
The company found the shelves were not as empty as they were during the 2021 season, with only a few pockets of emptiness with evergreen brands such as “Barbie” and “Hot Wheels,” which seemed to have shortages due to the products flying off of shelves.
When asked about Hasbro, Inc. HAS, Weiser noted the company had changed over the years, with 60% of revenue coming from toys and 40% profit.
Despite some negative chatter with regard to “Magic the Gathering” and “Dungeons and Dragons,” Weiser believed there would be strong growth for the Wizards and the digital gaming business going forward.
The analyst mentioned that Mattel Inc MAT back in the Disney princess doll business should give the company’s stock a lift.
Weiser explained Mattel, unlike other toy companies, had its own plants in Asia that manufacture fashion dolls, which are one of the company’s highest-margin products. Weiser believed Mattel would do a great job with the dolls and it was a growth opportunity for the company to build and expand in-house over the next few years.
Weiser was also asked about Funko Inc FNKO, a company that recently landed an investment from eBay Inc EBAY and signed an exclusive partnership with them.
Weiser believed this partnership was important for future growth and noted investors who have been on the board of directors are known to be very active and could make their mark on Funko strategy.
She added Funko should start developing its own IP and products.
An Eye for Beauty: The beauty space has been robust, too, particularly in the fragrance area. Consumers discovered more experimentation and the benefits of fragrances as a mood lifter during the COVID-19 pandemic and this experimentation continued post-pandemic, Weiser said.
Weiser also mentioned elf Beauty Inc ELF had been doing exceptionally well.
Weiser said Elf Beauty wanted to take over market share from companies such as Revlon, which went through bankruptcy, and become the number-one mass color company in the U.S.
Weiser noted the recent short report on Planet Fitness Inc PLNT was baseless, and the company had a great franchise model, with a mid-teens growth rate that it could hit over the coming years.
She also said that the claims in the short report regarding Planet Fitness making it hard for members to cancel their subscriptions were not true and company has a highly regarded policy with regard to membership cancellation.