The Hindu Business Line  Nov 21  Comment 
Warner Bros Consumer Products India has signed a deal with Exelixi Management Ltd to roll out Kids WB stores across the country over the next five years.Kids WB – Warner Bros Consumer...  Nov 19  Comment 
CANBERA (dpa-AFX) - Asian stock markets are turning in a mixed performance on Wednesday. Most of the markets in the region opened on a firm note, but some of them gave up early gains with investors looking ahead to the release of U.S. Federal...
Forbes  Nov 18  Comment 
The worst performing sector as of midday Tuesday is the Services sector, up 0.3%. Within that group, Urban Outfitters (NASD: URBN) and Staples (NASD: SPLS) are two large stocks that are lagging, showing a loss of 7.9% and 1.5%, respectively. Among...
The Economic Times  Nov 18  Comment 
While women make up 85% of all consumer purchases, majority of consumer products cos have a predominantly male senior executive team, says the survey.
Forbes  Nov 17  Comment 
In afternoon trading on Monday, Utilities stocks are the best performing sector, higher by 1.2%. Within that group, Public Service Enterprise Group (NYSE: PEG) and Entergy (NYSE: ETR) are two of the day's stand-outs, showing a gain of 2.2% and...
Forbes  Nov 14  Comment 
Looking at the sectors faring worst as of midday Friday, shares of Healthcare companies are underperforming other sectors, showing a 0.9% loss. Within the sector, Biogen Idec (NASD: BIIB) and Celgene (NASD: CELG) are two large stocks that are...
Forbes  Nov 12  Comment 
The best performing sector as of midday Wednesday is the Services sector, higher by 0.6%. Within that group, Macy's (NYSE: M) and Urban Outfitters (NASD: URBN) are two large stocks leading the way, showing a gain of 4.8% and 3.0%, respectively....
Forbes  Nov 7  Comment 
Early in my career, I served as Product Manager of Consumer Products for the Stromberg-Carlson Company. One day in January 1961 I received a call at work from a vice president of General Dynamics, the parent company of Stromberg-Carlson, who asked...
Market Intelligence Center  Nov 6  Comment 
Consumer Staples Select Sector SPDR (XLP) was selected by's trade-picking algorithms today after trading between $47.24 and $47.66 on Wednesday before closing at $47.47. A diagonal spread using a long position in the...


The Toy business leads this category, and by a wide margin. The 3 largest U.S. toymakers, Hasbro (HAS), Mattel (MAT), and JAKKS Pacific (JAKK), were all on the screen for significant periods of time. I think this is another illustration of how the Magic Formula does a lot of the work of digging up beaten down sectors for us. The first quarter is generally a weak one for toymakers, as most of their profits come in the Christmas season (as much as 60%).

The original thought was to separate between Consumer Staples (items that we must buy regardless of our financial condition) and Consumer Discretionary (luxury goods). However, many of the industries above would be ambiguous. For example, we need shoes (making them a staple), but in tight times we may decide to buy a store brand instead of more expensive Nike (NKE), adding a measure of discretion to the purchase. Consumer goods companies can make great long term investments - just ask Warren Buffett, whose investments in Coca-Cola, Anheuser-Busch Companies (BUD), and Procter & Gamble Company (PG) are legendary.

Forces affecting the Retail Industry

Brand is unquestionably the strongest form of competitive advantage in Consumer Goods. However, it's important to also judge the durability of the brand. For example, Coke is a brand known around the world, and has endured over 100 years of competition to still enjoy the top spot in the soda category today. That's a durable brand. Compare this to Gap (GPS).Ten years ago, Gap and it's spin off stores Old Navy and Banana Republic were considered fashionable and chic for the all important teen and college set. Today, the store is avoided by those same groups, lest their fashion sense be ridiculed by friends. That's a fickle brand. It's important to be able to separate a fad from a juggernaut. Add this to the PR problems Mattel faced last year with lead paint, and you have an unwanted sector, with some interesting potential investments.

Distribution is also important in the Consumer Goods sector. A company with a wider distribution network can leverage economies of scale to earn more on their fixed costs. An especially attractive arrangement is when one of these companies has an exclusive deal with a large distributor. Take Anheuser-Busch (BUD), for example. While this firm has an incredibly strong brand, they also require exclusivity from distributors. This allows them to lock out competitors like Molson Coors (TAP) and Miller, protecting profit margins. The soda companies also do this well. Have you noticed that McDonald's (MCD) only sells Coke products, while Pizza Hut (Yum! Brands (YUM)) only sells Pepsi? With these exclusive deals, competitors are blocked from those roads of distribution, protecting profits for the established companies.

Companies in the Consumer Products Industry (346)

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