Despite higher grocery and gas bills, parents are still spending big on toys and games

• Toymaker Hasbro, home of Transformers, Play-Doh, and Power Rangers, reported strong quarterly sales.
• Mattel reported a jump in second-quarter sales, signaling willingness to buy Barbie and Hot Wheels.
• Deloitte suggests parental pandemic fatigue may be responsible for indulgences.

Even with the cost of games and toys going up, players gonna play, play, play, play, play.

In the face of higher raw material costs and supply-chain disruption, toymaker Mattel reported a 20% jump in second-quarter sales on Tuesday, signaling consumers' willingness to splurge on Barbie, Hot Wheels, and Mega Construction sets despite economic turmoil.

Likewise, last week Hasbro, the maker of My Little Pony and games like "Magic: The Gathering," reported strong second-quarter sales, even though the company raised prices.

Consumers' appetite for toys and gaming remains sturdy despite the price hikes, Hasbro said on an earnings call last week. With a toy portfolio that includes classic names like Transformers, Play-Doh, and Power Rangers, Hasbro's earnings show some consumers were not dissuaded by higher costs.

"We have very resilient segments across toys, games, and entertainment. These tend to be small luxuries that consumers value pretty highly." Chris Cocks, CEO of Hasbro, said on the call. "We continue to see consumers being very resilient with a deep well of savings and a large amount of passion for pursuing what they love," Cocks said.

Experts say pandemic fatigue may be responsible for parents' indulgences. Deloitte suggests the pandemic caused many to "reassess priorities, and sustainability and their child's mental health are top of mind."

The trend shows no sign of slowing as parents gear up to send their kids back to the classroom. Deloitte's 2022 back-to-school survey results indicate parents could spend up to 8% more this year than last year — roughly $661 per student — on technology tools and traditional supplies.

Hasbro expects inflation will continue through the holiday season, an assessment that's in line with many economists' forecasts. However, if past economic downturns indicate future performance, Cocks said he's confident that the company will continue to fare well.

"The games business tends to be very resilient," Cocks said. "'Magic: The Gathering' has grown 12 out of the last 13 years, and that growth vector started back in 2008, during the last financial crisis."

Consumers' willingness to plunk down more money for toys and card games like "Magic: The Gathering" — or, in some cases, get their parents to do so — comes as inflation sits at its highest level in 40 years. Costs for essentials like gas, groceries, and rent have soared amid surging demand and supply-line bottlenecks following the pandemic-induced shutdowns that battered large portions of the economy.

Despite absorbing higher production costs and commodity volatility, sales at Hasbro have remained stable with the second-quarter expansion of tabletop and online versions of "Magic: The Gathering." Hasbro's "Wizard's of the Coast" and digital gaming division, which includes the "Dungeons & Dragons" franchise, saw a 17% jump in operating profit. "Dungeons & Dragons" appears to be enjoying renewed interest in recent years after being prominently featured on the popular Netflix series "Stranger Things."