Vtech 2015 Annual Report Download - page 15

Group revenue in North America decreased by 5.4% to
US$899.5 million in the financial year 2015. Lower revenues
from ELPs and CMS offset higher revenue from TEL products.
North America remained VTech’s largest market, accounting for
47.8% of Group revenue.
ELPs revenue in North America decreased by 16.2% to
US$300.0 million, as sales of both platform and standalone
products declined. Nevertheless, in the calendar year 2014,
VTech became the number one manufacturer in Infant and
Preschool Electronic Learning toys in the US market9.
In platform products, sales of VTech’s InnoTab range of
educational tablets suffered from higher-than-expected
channel inventory and severe competition, heightened by the
contraction of the children’s tablet market10. In July 2014, VTech
launched Kidizoom Smartwatch, the world’s first smartwatch
for children with a built-in camera, in the US. It achieved strong
sales and was recognised in numerous top toy lists.
Standalone products showed a slight sales decline, as retailers
tightened inventory management. Strong growth of the Go! Go!
Smart family of products was offset by lower sales of the core
infant and preschool learning products. Switch & Go Dinos® also
recorded a sales decrease as the product line matured. During
the financial year 2015, Go! Go! Smart Wheels® was extended
with the introduction of new models. The launch of Go! Go!
Smart Animals™ nationwide, coupled with the exclusive launch
of Go! Go! Smart Friends in partnership with Toys“R”Us, added
incremental sales. The Go! Go! Smart Animals Zoo Explorers
Playset won the prestigious “2015 Infant/Toddler Toy of the Year
(TOTY) Award” from the American Toy Industry Association.
TEL products revenue in North America rose by 4.4% to
US$416.0 million. The increase was driven by higher sales of
commercial phones and other telecommunication products,
offsetting a slight sales decline in residential phones.
Commercial phone sales continued to grow, as a result of
higher sales of VTech’s small-to-medium sized business (SMB)
phones and cordless headsets. This was augmented by the
launch of ErisStation, the Group’s first conference phone with
wireless microphones, and ErisTerminal, its SIP phone systems.
Hotel phones also reported higher sales, as VTech continued
to win new installations from global hotel brands. In other
telecommunication products, baby monitors recorded a strong
sales increase. The Group expanded its distribution channels
and gained more placements, as major retailers began to
replace older analogue models with VTech’s more advanced
digital baby monitors.
Sales of residential phones, however, recorded a slight decline
owing to the further contraction of the fixed-line telephone
market. Despite this, VTech maintained its number one position
in the US residential phones market11. The Group continued to
gain retail shelf space and expand sales channels.
The revenue from CMS in North America decreased by 5.4%
to US$183.5 million, as sales declines in professional audio
equipment and communication products were only partially
offset by higher sales of solid-state lighting, industrial products,
home appliances and medical and health products.
Sales of professional audio equipment declined as an existing
customer placed fewer orders in response to over-inventory
and completed transferring the manufacture of one product
family to its own facility, where there was excess capacity.
Sales of communication products also decreased, as a client’s
product line reached the end of its life cycle. In contrast, sales of
solid-state lighting and industrial products grew, as a customer
ramped up orders in solid-state lighting. VTech has also
started to become the sole supplier to an existing industrial
products customer. Home appliances posted good growth as
a customer expanded its sales channels. Medical and health
products recorded higher sales owing to new product launches
by customers.
NORTH AMERICA
9 Source: NPD Group, Retail Tracking Service. Ranking based on total retail sales in
the combined toy categories of infant electronic learning, other infant toys and
preschool electronic learning for the 12 months ending December 2014
10 Source: NPD Group, Retail Tracking Service
11 Source: MarketWise Consumer Insights, LLC
Revenue in North America in Last 5 Years
US$ million
1,000
800
600
400
200
011 12 13 14 15
874.9 903.5 933.4 950.7
899.5
13VTech Holdings Limited Annual Report 2015