According to leading consumer and retail information company, The NPD Group, U.S. retail sales of toys generated $22.1 billion in 2007 compared to $22.6 billion in 2006, a decline of only 2 percent, despite the toy industry recalls and difficult economic conditions that plagued the industry in 2007.

The strong performance of two key super-categories helped to offset losses. Sales of Action Figures & Accessories were up 8 percent over 2006, while Vehicles experienced a 6 percent increase over the same time period.

The most significant losses were experienced in Infant/Preschool, Outdoor & Sports Toys, and Dolls with respective declines of 5 percent, 5 percent and 8 percent. Top properties for the year included Barbie, Bratz, Cars: The Movie, Crayola, and Dora the Explorer, with properties such as Air Hogs, Hannah Montana, Spider-Man, Transformers, and Webkinz experiencing the most growth. Licensed toys represented 27 percent of total industry sales in 2007, with Cars: The Movie, Disney Princess, Dora the Explorer, Spider-Man, and Star Wars leading the list of best-selling licensed toys.

According to NPD, an emerging trend in the industry is the increase in sales of connected Web play toys. “Connected Web play toys, which marry a physical toy with ongoing digital play opportunities via the Internet, is a relatively new phenomenon that we've seen emerge within the toy industry,” said Anita Frazier, industry analyst, The NPD Group. “Thanks in large part to the popular Webkinz brand, this type of play is expanding into new categories and across many properties.”

Channel sales performance revealed surprising results, as 2007 marks the first in several years that the Mass Merchant/Discount channel has not experienced an increase in its dollar share of the toy industry, coming in at 55 percent. Dollar sales increased in the Online/Internet channel by 9 percent, bringing its share of toy industry sales to 7 percent in 2007.

“Despite economic concerns, last year’s results speak to the resiliency of both the toy industry and parents’ desire to delight children with new, innovative and fun toys to play with,” said Frazier. “I’m encouraged by the innovation within the toy industry and am eager to see the new product offerings at this year’s Toy Fair.”

*NPD is following the National Retail Federation’s (NRF) recommendation of adding a 53rd week to the 2006 retail calendar year (February 2006 – January 2007). Due to the extra week in calendar year 2007, which falls in Jan’07 and represents approximately 2 percent of annual dollar sales, care should be taken when comparing any 2007 data to prior years.