Spin Master Earnings: Toy Sales Offer Investor Stability Despite Higher Economic Duress 

No-moat Spin Master printed second-quarter results that tracked in line with our full-year outlook. At first glance, the quarter appeared healthy, with revenue of $412 million down a mere 2%. However, on an organic basis, revenue fell 12.4%, behind narrow-moats Hasbro’s 6% like-for-like decline and Mattel’s 1% downtick in the same period. The largest detractors was the wheels and action segment, down 25%, which experienced declines in Bakugan, DC Comics, and Tech Deck. Digital games fell 14%, facing a weaker consumer that crimped spending and in-game purchases. However, we expect modest improvement in second-half sales (up midsingle digits), bolstered by roughly $300 million in Melissa & Doug, or M&D, sales (particularly abroad) as well as elevated by new products (Blockables, Hatchimals) and value channel expansion.