10:35 h / 2021/05/19
Hong Kong-based VTech Holdings Limited reported its fiscal 2021 earnings this week with revenue spiking 9.5% to a record $2.37 billion.
While the multifaceted company is known for a mix of contract manufacturing services, telecommunications products, and electronic learning toys (ELP), it’s the latter that led the charge for growth.
ELPs revenue in North America increased by 8.8% to US$536.9 million, with good growth in Canada. The overall market grew, while VTech's sales to online retailers achieved a double-digit increase. The Group also gained market share and strengthened its position as the number one manufacturer of electronic learning toys from infancy through toddler and preschool in the US. In Canada, VTech strengthened its leadership further and remained the number one supplier in the infant, toddler and preschool toys category.
Standalone products performed well, with the pandemic spurring demand for electronic learning toys, as parents and children spend more time at home.
Growth in standalone products came from higher sales of both LeapFrog and VTech brands. The LeapFrog sales increase was especially robust. Preschool items offering overt educational values, including Learning Friends 100 Words Book, 100 Animals Book and 2-in-1 LeapTop Touch, achieved strong sell-through. The Blue's Clues & You! series of licensed products performed strongly, with the Really Smart Handy Dandy Notebook selling particularly well. Sales of LeapBuilders, however, registered a decline.
VTech standalone products benefited from rising sales of infant and toddler products, KidiZoom cameras, other Kidi line products and the Go! Go! Smart family of products. These increases offset a decline in preschool products. There were innovative additions to the product line-up during the period. Go! Go! Smart Wheels saw the launch of Ultimate Corkscrew Tower. Building on the success of the popular robotic toy Myla the Magical Unicorn, VTech launched Myla's Sparkling Friends, a line of toys that brings colour play to life using fantastical characters. Go! Go! Cory Carson vehicles and playsets also contributed to sales in the financial year 2021, supporting growth. Seasons 1, 2 and 3 of the associated animation series are now streaming globally on Netflix.
Sales of platform products in North America decreased slightly. At VTech, platform products saw sales decline, as higher sales of Touch & Learn Activity Desk were insufficient to compensate for lower sales of KidiZoom Smartwatches and KidiBuzz. For LeapFrog, the platform products business posted an overall decline. The brand's children's educational tablets and Magic Adventures Globe saw sales increases, offsetting declines in interactive reading systems and RockIt Twist. Subscriptions to the LeapFrog Academy increased substantially during the financial year 2021.
ELPs revenue in Europe increased by 5.4% to US$351.2 million. Growth slowed down in the second half, however, as lockdowns in the region forced the closure of stores selling non-essential items. Geographically, sales increased in France, the UK, Germany and the Netherlands, while Spain experienced a decline. In the calendar year 2020, VTech remained the number one infant and toddler toy manufacturer in France, the UK, Germany and the Benelux countries.
In standalone products, both the VTech and LeapFrog brands achieved higher sales. For the VTech brand, growth was led by electronic learning aids, KidiZoom cameras, other Kidi line products and Switch & Go Dinos. This offset declines in the Toot-Toot family of products. Sales of infant, toddler and preschool products were largely stable during the financial year 2021. The new Go! Go! Cory Carson vehicles and playsets were rolled out to the major European markets in September 2020 under the name Toot-Toot Cory Carson, which supported the growth in standalone products. LeapFrog saw rising sales of infant, toddler and preschool products, with strong sell-through of Learning Friends 100 Words Book and 100 Animals Book. This offset a decline for LeapBuilders/Bla Bla Blocks.
Platform products saw lower sales, as growth of LeapFrog branded products was insufficient to offset a decline in VTech branded products. For LeapFrog, the revenue increase was driven by higher sales of Magic Adventures Globe and interactive reading systems, which offset declines in RockIt Twist and children's educational tablets. At VTech, higher sales of Touch & Learn Activity Desk were unable to offset lower sales of children's educational tablets and KidiCom Max. Sales of KidiZoom Smartwatches remained steady year-on-year.
Revenue from ELPs in Asia Pacific decreased by 1.4% to US$82.0 million, as growth in Australia was offset by lower sales in mainland China. Australia saw a robust sales increase on strong sell-through of both VTech and LeapFrog branded products, with demand for educational toys rising as children spent more time at home due to the pandemic. In addition, effective channel management drove online-to-offline sales higher, boosting growth in the country. In the calendar year 2020, VTech maintained its position as the number one manufacturer in the infant and toddler toys category in Australia. In mainland China, sales were lower, primarily due to a revenue decrease in offline channels. In Malaysia, the Group recognised a first full-year sales contribution from its flagship store on Lazada.com.
ELPs revenue in Other Regions decreased by 30.6% to US$8.4 million. Higher sales in Africa were offset by lower sales in the Middle East and Latin America.