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September 9, 2010
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RC2 Corporation (RCRC) is planning a retail launch of its Chuggington die-cast toy line in the United States in October. RC2 Corporation is a leading designer and producer of innovative, high-quality toys, collectibles and infant and toddler products, primarily marketed under its Learning Curve family of brands.
Chuggington is a computer generated 3D series as well as a fully immersive interactive website. The series fascinates preschoolers with the adventures of three trainee engines, Wilson, Brewster and Koko. Ludorum, a global media company that builds quality children's entertainment franchises, is the creator of Chuggington.
Following the recent success and encouraging television ratings of Chuggington train play products in U.S. Playhouse Disney, RC2 Corporation is all set to launch its new Chuggington line exclusively at Toys"R"Us stores across the country and online at Toysrus.com. The new Chuggington toy line will feature action packed toys with developmental messages and storylines.
Earlier this year, Chuggington made its retail launch in the U.K., Germany, France, Australia and Canada and has been well received.
In addition to the Chuggington master toy licensing rights, RC2 holds a 50% interest in Chuggington's intellectual property rights with Ludorum.
RC2's overall sales and profit were lower in the second quarter of 2010 compared with the prior-year period due to the transition in its preschool, youth and adult products categories. Nevertheless, we believe that the company will benefit from Chuggington and Dinosaur Train product launches in international as well as U.S. markets in the second half of the year.
We are also positive about the Chuggington franchise. Following the show's successful run on Playhouse Disney and the product lines' ongoing oversees success; management expects Chuggington to enjoy robust demand and high sales in 2010 and beyond. We have a Zacks Rank of #2 (short-term Buy recommendation) on the shares. We also reiterate our long-term Outperform rating.
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