PORT WASHINGTON, N.Y. -- February 2007 -- According to leading consumer and retail information company The NPD Group, retail sales in the U.S. toy industry increased slightly (up 0.34%) and generated over $22.3 billion in 2006 compared to $22.2 billion generated in 2005*.

Besides the first quarter of the 2006 calendar year (Jan. - March), which experienced a 3 percent decline in total dollar sales due in part to a shift in timing of the Easter holiday, the remainder of the year saw quarterly sales increases of 2 percent, 1 percent and 1 percent, respectively. At $10.6 billion in sales, the fourth quarter generated the largest amount of the industry's revenue.

The strong performance of four super-categories helped the industry experience positive dollar sales growth over 2005. Sales in Youth Electronics increased 22 percent over 2005, the largest increase of all super-categories. Vehicles, Arts & Crafts, and Infant/Preschool were the other strong performers in 2006, showing respective dollars sales increases of 5 percent, 4 percent and 2 percent over 2005. Combined, these four super-categories comprised over $9 billion in retail sales.

"In 2006 we identified a number of indicators which pointed to future growth for the toy industry. I'm pleased we're seeing these growth indicators beginning to reflect in the retail sales figures and we look forward to watching this progress in 2007," said Anita Frazier, industry analyst, The NPD Group.

Action Figures, which performed strongly in 2005 due to the huge success of Star Wars products, experienced the largest decline in dollar sales in 2006, dropping by 9 percent and generating close to $1.25 billion.

According to Frazier, the Action Figure super-category can expect to see increases in 2007 because of the release of major action movie properties that generally benefit toy sales.

"As a rule of thumb, licensed product will comprise approximately 25 percent of total toy sales in any given year," she said. "With movie releases such as Transformers, Spider-Man 3, and Fantastic Four: Rise of the Silver Surfer, the action figure super-category should realize gains in 2007."

Retail channel performance revealed continued share growth at Mass Merchant/Discount in 2006, representing 55 percent of total sales, with Toy Stores representing 18 percent, the second largest channel in terms of traditional toy sales. Online, Food/Drug and Department/Major Chains represented 6 percent, 5 percent and 4 percent of 2006 channel sales, respectively. Online toy sales were up 12% versus 2005.

Average Retail Prices were also up 5 percent which reflect consumers willingness to spend on higher priced toys, while sales in the 0-7 year-old age group increased close to 5 percent from $12.7 billion in 2005 to over $13.2 billion in 2006.

* The NPD Group has enhanced its consumer panel information to provide a more accurate read on market shares and trends. This new release was developed in conjunction with the toy industry and reports on an increased number of transactions to allow for increased accuracy of item descriptions and more accurate visibility into alternative channels.