Citing 'frenzied demand' for Hatchimals, Spin Master hatches spin-offs

Following the frenzied demand for Hatchimals at Christmastime, executives at Canadian toymaker Spin Master say the company is incubating new Hatchimal toys to be released later this year.

The plush animatroniccreatures that emergefrom an egg after receiving some tender loving care,became a must-have toy for Christmas, boosting the company's fourth-quarter revenue in 2016 by 30.9 per cent. The toysreceived press coverage around the world after reports that many Hatchimals failed to hatch, disappointing children and frustrating parents, some of whom shelled out big money for the coveted toys on the black market.

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"Initial shipments flew off customer shelves following our Hatchimal Hatch Day on Oct. 7, and we could not restock fast enough," said Spin Master chief operating officer Ben Gadbois during a Tuesday conference call with investors.

"I'm glad to say that Hatchimals are back in stock at major retailers, and demand remains strong."

Number of defective toys unknown

Spin Master has not publicly disclosed how many Hatchimalshave beensold much less how many failed to hatch but Gadboissaid the company has recorded "well over two million successful hatches."

Executives on the conference call did not reveal the exact problem with the defective Hatchimal toys,how many were replaced, or the cost of replacing them. And the company declined to take questions from a CBC News reporteron the conference call.

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Spin Master's fourth quarter gross sales for the toy category includingHatchimalsincreased 85.2 per cent compared to the fourth quarter of 2015, to $92.6 million US. For all of 2016, sales of that segment increased 21.2 per cent over 2015, to $282.8 million US.

In February, Spin Master received an "Innovative Toy of the Year" award for Hatchimals at the North American International Toy Fair.

New Hatchimalson the way

Despite the launch problems, Spin Master executives indicated that the company is betting on Hatchimals for the future.

"Obviously when you have such a success, it is important to maximize the opportunity," said Gadbois.

Collectible Hatchimals will be coming "in a few months," he said. The collectibles "will be priced at $2.99 per single pack," and will also be available in packs of up to one dozen. There will be 70 different collectible Hatchimals, said Gadbois, who citedresearch from consumer research firmNPD that shows collectible toys are in demand.

A more expensiveHatchimal toy, "Hatchimal Glitter Garden," will be launching in mid-2017, according to Gadbois.

"These critters have sparkles in their fur, and hatch out of shimmering speckled eggs," he said.

Gadboisalsopromised "another big surprisefor our secondHatchimalday," around Oct. 6.

Spin Master reported revenues of$338.4 million US in the fourth quarter of 2016, up 30.9 per cent from the same quarter in 2015. Revenues increased 26.1 per cent year over year after excluding revenue from Swimways Corporation, which was acquired in the third quarter of 2016.