NEW HERITAGE DOLL COMPANY: CAPITAL BUDGETING

Emily Harris Vice President of New Heritage Doll Companys product

division

The Toy and Game Industry

- Revenue:
o 2008 - $42M
o 2013 - projected to increase by 4.6% to $52.5B
- Segments:
a. Video games
b. Traditional toys and games
seasonal
largest selling season winter holiday period
Sales
o 2008 - $3.1B
o 2013 projected to grow by 3% per year to $3.6B
a. Infant preschool toys
b. Dolls
c. Outdoor and sports toys
d. Other toys and games arts and crafts, plush toys, action
figures, vehicles and youth electronics

The Doll Category

- Included large, soft and mini dolls, doll clothing and other accessories
- Age compression -> the tendency of younger children to acquire dolls
that had traditionally been designed for older girls reduced growth in
the baby-doll segment
- Vigorous competition
-> large producers targeted similar demographics
-> marketed their dolls through the same media

New Heritage Dolls

- Founded in 1985 by Ingrid Beckwith, a retired psychologist with child
development specialization
- 2009 -> grown to 450 employees
-> $245M revenue
-> $27M Operating Profit
- Three divisions:
a. Production
b. Retailing
- $190M revenue for 2009
- $ 4.8M of operating profit
1. Online website
2. Mail-order paper catalog
 3. Network of retail stores
c. Licensing
- $24.5M revenue for 2009
- $14.5M operating profit

New Heritages Production Division

- largest division thru total assets
- Sales:
o 75% for the retailing division
o 25% private label goods manufactured for other firms
- target market: 3-12 years old
- Types of Dolls:
a. Baby dolls
1. Low-end
- $15-$30
- for younger girls in earlier stages of development
- has a birth certificate and a short personal history
2. Heirloom-quality dolls and access
- $75-$150
- appeal to older girls and to convey a sense of cultural and family
tradition among grandmothers, mothers and daughters
3. High-end dolls based on fictional celebrities
- Targeted the tween (8-12 yrs old)
- $75 - $150