Jobs, Babies May Boost Holiday Season Toy Sales: BMO Capital Markets

NEW YORK, NEW YORK -- (Marketwired) -- 11/24/15 -- U.S. toy sales may get a bump over the holiday shopping season from an improved job market, higher wages and an increase in the national birth rate (the first since 2007), according to BMO Capital Markets ahead of Black Friday and Cyber Monday.

"It all boils down to job growth," said Jennifer Lee, Senior Economist, BMO Capital Markets. "We expect the security of a steady paycheck is what could drive consumers during the holidays."

BMO Capital Markets experts forecast the following trends ahead of the U.S. holiday toy shopping season:

Jennifer Lee, Senior Economist

--  There are a number of factors that could support consumer spending.
    Topping the list is the job market. The U.S. created an average of
    215,000 jobs in the six months to October: a very solid trend.
--  Moreover, wage growth is finally picking up. Average hourly earnings
    climbed 2.5 per cent from a year ago in October, the fastest clip in six
    years. The jobless rate has also fallen to a 7 1/2 year low.
--  Drivers are still paying less at the pumps thanks to low gasoline
    prices.
--  Home prices continue to climb steadily, bolstering net worth.
--  The U.S. dollar is the strongest currency of all the majors so far this
    year, driving consumer prices and import prices down and giving
    consumers more purchasing power.

Gerrick Johnson, Toy Analyst

--  U.S. toy sales are predicted to rise 5 per cent this year - to some USD
    $19 billion at retail - compared to a 6 per cent estimated rate of
    growth for the global market which could see some USD $85 billion in toy
    sales.
--  Despite the general strength in the toy industry, the holiday surge has
    been late in arriving this year, owing to warmer temperatures. We are
    confident, though, that missed sales in the toy segment will be made up
    as we move closer to the actual holidays.
--  Toy sales have been strong for the last two seasons, with better
    innovation, lower gas prices, rising birth rates, and "toyetic" movies
    driving consumer purchases.
--  Toy companies are bringing more innovation to market, relying less on
    retro toys and classics and signaling a willingness to take more risks
    this year.
--  An increase in U.S. birth rates in 2014 (the first since 2007) could
    finally provide a tailwind for the infant/pre-school category, a poor
    performer over the last half a dozen years.
--  BMO Capital Markets believes a parental pushback against screen-based
    activities (i.e. tablets, phones, and video games) is a benefit to sales
    of traditional toys, particularly outdoor toys, construction sets, and
    arts & crafts.
--  Bringing families together is a trend that is growing stronger in 2015,
    helping sales of traditional board games grow by double digits.
--  Interactive figures like Skylanders, Disney Infinity, and LEGO
    Dimensions continue to be strong - proving that toys and technology do
    not need to be mutually exclusive.
--  Construction toys continue to perform well, with other top trends in
    toys being robotics, drones, STEM, small collectible figures, and make-
    your-own food.
--  The Star Wars Episode VII movie dominates the headlines - but with a
    December 18 movie release, sales of Star Wars toys have, thus far, been
    limited mainly to adult collectors.
--  Fashion dolls and plush are the weaker performing categories in the toy
    industry right now.

About BMO Capital Markets

BMO Capital Markets is a leading, full-service North American financial services provider. With more than 2,300 employees operating in 29 locations, including 16 in North America, BMO Capital Markets offers corporate, institutional and government clients access to a complete range of investment and corporate banking products and services. BMO Capital Markets is a member of BMO Financial Group (NYSE: BMO)(TSX: BMO), one of the largest diversified financial services providers in North America, with total assets of CDN $672 billion as of July 31, 2015, and more than 47,000 employees.

For Important Disclosures on the stocks discussed, please go to http://researchglobal.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx or write to Editorial Department, BMO Capital Markets, 3 Times Square, New York, NY 10036 or Editorial Department, BMO Capital Markets, 1 First Canadian Place, Toronto, Ontario, M5X 1H3.

Contacts:
Media Contacts:
Harris Rubinroit, New York
(212) 702-1992
[email protected]

Pav Jordan, Toronto
(416) 867-3996
[email protected]
www.bmo.com

Source: BMO Capital Markets

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