Peppa Pig toy distributor takes a pounding over weak Sterling
The Character Group warned that profits will be below expectations as the pound’s falls against the dollar hit margins
The distributor behind Peppa Pig, Doctor Who and Fireman Sam toys has said profits will be lower than expected this year due to the weak pound and the collapse of its largest Scandinavian customer.
The Character Group warned profits will now be between £11 million and £11.5 million for the year to August 31 – slightly below expectations.
Bosses explained that a significant proportion of purchases for toys it sells in the UK are made in US dollars – meaning recent falls to 34-year lows in the pound versus the currency have hit profit margins.
The continued uncertainty over Brexit has led to a weakening of sterling in foreign exchange markets, particularly against the US dollar, and this has been a factor for Character's domestic business. The Character Group
The company said: “The continued uncertainty over Brexit has led to a weakening of sterling in foreign exchange markets, particularly against the US dollar, and this has been a factor for Character’s domestic business.”
It added: “The most significant factor has been the failure of the retail market in Scandinavia to fully absorb the sales vacuum caused by the liquidation in January this year of Top Toy.”
There was some better news as the business revealed it had secured a six-month extension to its licence with Peppa Pig owner Entertainment One to keep selling Peppa and her friends until June 2021.
But rival toy brand, Hasbro, recently announced plans to buy Entertainment One, meaning the future for Character Group’s relationship with Peppa Pig could suffer.
The company said: “To date, there has been no dialogue between the company and Hasbro as to its future intentions for Peppa Pig and… it is unlikely that a definitive position in that regard will be known for some time.”
Bosses explained they would now be focusing their attentions on new brands, trying to catch the next craze and cash in – most recently with the launch of Goo Jit Zu figures.
They said: “We have launched Goo Jit Zu, a new in-house product line/brand developed in collaboration with an overseas toy company, and the reception in the market amongst our customers and global distributors has been very enthusiastic.”
Investors were less enthusiastic on Friday morning, with shares falling 5% in early trading, down 20p at 350p.