Mega Brands' battle plan

Mega Brands has had a tough time recently and recall nightmares have contributed to its heavy level of debt. But with some licensing deals and optimism in Battle Strikers, the firm is confident it can come off the ropes fighting. We spoke to CEO Marc Bertrand about its ongoing battle?
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With more than $350m of debt, plant closures, lay offs and generally the kind of negative financial headlines most firms could do without, you could be forgiven for expecting Mega Brands to feel a little beleaguered at the moment.

But with Thomas and Friends construction items arriving next summer, a deal for toys based on Microsoft Halo video games and, more immediately, the launch of Battle Strikers, there’s more than a little cause for optimism and there’s certainly no discernible trace of despondency from the firm.

But, CEO Marc Bertrand is by no means dismissive of the task that confronts the firm in finding its way back to profitability: “There is a lot of debt, due to the acquisition of RoseArt and the recall costs involved with that,” he explains.

“But we have the liquidity we need and we’re focusing on building the business. The first half of this year was about working down the inventory at retail and focusing on what we’re launching.

“We have good pre-school lines in Yo Gabba Gabba, In The Night Garden and Nickelodeon licences. We take on Thomas and Friends construction toys in January 2010, launching in July 2010, so we’re pretty excited about that.”

New investment from Canadian capital specialist Fairfax has given the firm some breathing space, but there’s no doubt that there is a lot riding on its key lines. It has a solid line-up of boys brands and it needs a performance from all of them.

“We’re very boys focused with our line-up,” adds Bertrand. “We have Streetz, which we are backing with TV and Halo Wars, which has a good placement worldwide. We have Iron Man 2 next year, construction ranges for that. We’ve got some good product development.”

But it’s Battle Strikers that is giving the firm reason to believe at the moment. Just launched in the UK, the firm is putting real weight behind the brand and it has already topped Hamleys’ Christmas Top Ten list.

Battle Strikers is creating a lot of excitement. “We have the Battle Strikers Turbo taking place in the US with ten vans touring 22 cities organising demos and tournaments to generate local PR.

“It’s the most extensive marketing campaign we have ever run.”

The range launched here at the end of July, kicking off with a TV campaign, including sponsorship of Cartoon Network. The UK will also have its own version of the Battle Strikers Turbo Tour and it will be back on TV later in the year too.

“We’ve seen what has been going on with it in the US and we’ve done some trials with it here too,” says UK managing director Dave Martin. “Kids are really engaging with it and the sales velocity is very strong. I’ve been involved in lots of launches and this is as good as it gets. We’ve got 100 per cent distribution and we’re very confident.

“Everyone is on board and it’s a fantastic opportunity for the trade. Everyone who has seen it has been impressed. It’s just about getting boys interested in concepts. When you engage with them in the right way they get into the collectability of it.”

Much is riding on the magnetic battling tops game, but the firm still has the cash to back it heavily here and in the US. Having (fingers crossed) seen off its recall nightmare, a good performance from its leading lights could finally put the firm back on track.


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