ROTH – Consumer: Infant & Juvenile: Highlights From Recent Industry Tradeshow

We recently attended the ABC Kids infant & juvenile tradeshow in Las Vegas. Our recap report includes specific data points related to covered exhibiting companies Dorel, Crown Crafts, and Summer Infant. We see continued growth in I&J industry revenue, helped by ongoing gains in spending per child and with births now rising due to continued modest economic improvement. We are also encouraged by generally increasing retail floor space allocations to I&J products.

 

The company is seemingly now benefitting from a renewed focus on product development for the juvenile business following its transition to vertically-integrated China manufacturing. We came away encouraged not only by improved product fit and finish, but also strong buyer attendance throughout the show. New products garnering notable attention included a higher price point Quinny stroller and certain other strollers and car seats. Management also noted recent success with its value-oriented Cosco brand and within its juvenile home furnishings segment. While overall near-term results should remain pressured by currency, management noted a big opportunity for various improvements in the bike business under a new COO.

 

With retailers like Walmart and Target expanding their infant & juvenile assortments and Babies“R”Us now working to raise prices, we came away encouraged by Crown Crafts’ seeming barbell approach to new product introductions and perhaps related product segmentation strategies. Crown demonstrated several value-based and higher-end offerings, including two Zutano licensed lines each targeted to different customer bases, new Petunia Pickle products catering to higher-end customers, and a new lower-priced “Little Love by NoJo” line. Meanwhile, the company expanded its offering under a U.S. distribution agreement for the U.K.’s The Gro Company to include not only swaddles, but also soothers.

 

Summer Infant’s renewed focus on innovation is helping to drive increased shelf space at retail and higher gross margins. New products include easier-to-use bottles with fewer parts, baby monitors that are more mobile in nature, revamped high-margin SwaddleMe products with improved packaging and design, an entirely new toy line branded Kiddopotamus with new distribution at buybuy Baby and Babies“R”Us, a gate program distributed at Home Depot, and a potty line garnering strong initial sell-through. The company is also in the process of launching several new strollers that build upon the success of 3D Lite, which has helped Summer to generate double-digit category growth in recent years and helped to push the brand up to a #5 stroller ranking in ROTH’s recent proprietary survey of 1,000 millennial moms. New strollers include an attractively-priced jogger, a 3D Lite for doubles, and a stroller tailored to the European market. Looking forward, Summer will soon launch several products for a “smart” nursery including a smart bottle maker / formula dispenser, a movement monitor / sensor pad, a changing table that measures and records weight, and a soother with the capability to awaken babies naturally. These products will work both independently and in concert through a synced app that will allow for the addition of new devices to the environment. This smart nursery should launch in summer 2016 with ongoing

marketing and promotion beginning this March.