Firstly, how has 2012 been in general for LeapFrog?
2012 has been a terrific year for LeapFrog. Through Q3 our US net sales were up 36 per cent and International net sales grew 41 per cent. Our sales performance has been driven by high consumer demand for our award-winning learning tablets and engaging content, which are experiencing strong double-digit growth in the US and many international markets.
We also made substantial progress in our strategic transition from an educational toy company into a developer and distributor of educational entertainment.
With the launch of our LeapPad1 in 2011, we pioneered the children’s educational tablet market and quickly became the market leader. In 2012, we built on that success with the launch of LeapPad2. NPD recently announced that LeapPad2 has become the number one pre-school tablet and number one toy in the UK.
We also introduced a major upgrade to our Leapster Explorer, the market leading handheld learning gaming system, with the launch of the Leapster GS.
While hardware is an important part of the equation, it’s the content that the child experiences on our platforms that truly changes his or her life. Unlike the bulk of our competition, all of the content that LeapFrog offers has been either developed or selected by our in-house team of child development experts. This year we will more than quadruple our content library from approximately 100 titles to more than 400. All in all, a very busy year.
What has been your highlight of the year? Has there been a lowlight?
The highlight of the year for me is the dozens of emails and letters we have received from parents, grandparents and teachers telling us about the life changing impact our products have had on their children. All of us at LeapFrog have a deep passion for helping children achieve their potential and there’s nothing quite like customer feedback that shows we are making great progress.
Research shows that achievement at pre-school and primary school directly relates to later academic success. Yet, almost half of children start school underprepared. As parents we need to help every child get the best start in life.
You've just announced that LeapFrog has raised its sales expectations for 2012 – what is this mainly attributable too?
In Q3 we have seen strong growth across our tablet hardware and content offerings. LeapPad2, coupled with our educational and engaging content, is a global phenomenon that continued to experience strong momentum as we headed into the holiday season. In addition to LeapPad2, our Tag Reading System range, My Pal Scout, the Touch Magic range and LeapsterGS have also proven to be popular among children and parents.
What kind of feedback are you getting from retail on LeapPad2 – both in the UK and the US?
The feedback has been overwhelmingly positive, with many of the major retailers telling the world that the LeapPad2 is a top selling product of 2012. Our retail partners also love the fact that they can sell lots of profitable content and accessories to LeapPad families.
Longer further ahead, what's the future for LeapPad, do you think? Where can it go next?
Children are going to be playing with tablets for a long time to come. It’s our job to make sure we extend and refresh the LeapPad so it continues to be their number one choice around the world. We will also continue to create fun, educational tablet content that changes children’s lives.
Do you think we have seen the best of the kids tablet boom – how do you think this space will evolve?
I believe the children’s tablet market has significant growth ahead of it. With new children being born every year and consumers desire to have the newest technology the children’s tablet market is going to continue to grow at a rapid pace.
LeapPad aside for one moment, what else can we expect to see from LeapFrog in 2013?
We have lots of cool new stuff planned for 2013 and 2014. We will continue to expand our range of content partners to offer ever more games and apps that keep children learning and having fun. We are also working to bring new additions to our award-winning toy and reading lines.
Do you think your previous life working at Toys R Us has helped in any way now that you are on the supplier side of the fence?
I feel very fortunate to have worked ‘both sides of the street’. A deep understanding of how major retailers operate is priceless for any manufacturer/supplier.
How important have apps become for LeapFrog? How will you look to grow this area of your business in 2013?
Making cool, kid-tough hardware is just one component of a great child tablet experience. The content is where true life-changing learning begins. Apps are becoming increasingly important to our tablet and gaming businesses. They allow us to extend our selection and deliver new and varied learning experiences in a convenient way that consumers have come to expect. We will continue to develop apps in-house as well as look to expand our selection with strategic partnerships.
Could acquisitions be on the cards to help grow the business even further?
Over the last couple of years we have been building a strong base of cash. In 2012, we will finance all of our operations with zero debt. This strong cash position gives us the ability respond quickly to acquisition opportunities.
What are the main differences between the UK and US toy markets at the moment, in your opinion? What emerging trends do you see? Are they facing similar challenges in their retail environments and general conditions?
The economic recession has had a greater impact on the UK than the US, and as a result it is a far tougher market. Traditionally, tough market conditions polarize consumer demand, with hot products selling out fast, and slower selling products getting left on shelves, creating end-of-year inventory problems. As UK retailers fight for customer traffic we are seeing significantly greater price competition, which has the potential to erode margins for everyone.
What are your main aims for 2013? What would you most like to have achieved by the end of the year?
In 2013 we are going to continue to invest in creating revolutionary products that provide children with compelling and engaging entertainment, yet are filled with nutritional education. Millions of children around the world enjoy LeapFrog products every day and we are helping all of them achieve their potential.