Spin Master Corp. says it continues to face challenges as inflation and the high cost of living weigh on consumer discretionary spending on toys.

"With rising prices and basics like shelter, food and energy, consumers are feeling the pinch," said Max Rangel, president and CEO of Toronto-based toy and entertainment company, in a call with analysts on Wednesday.

"We expect this environment will continue throughout 2024 as consumers manage through the impact of high interest rates and inflation," he added.

Rangel said the company is reducing the average prices of its toys by nine per cent for 2024.

Spin Master, which is behind the popular brands Paw Patrol, Bakugan, Hatchimals and Rubik’s Cube, has a series of new releases lined up for the fall, Rangel said.

The comments came as Spin Master reported a loss of US$54.8 million in the first quarter, compared with a loss of US$1.9 million a year earlier. Its revenues totalled US$316.2 million, up from US$271.4 million during the same quarter last year.

The acquisition of toy company Melissa & Doug added US$40.4 million to Spin Master's revenue during the quarter.

Chief financial officer Mark Segal said in a release that toy gross product sales excluding the acquisition's impact were in line with a year earlier, during what's normally the lowest quarter for the toy industry.

He said that during the quarter, the company was focused on Melissa & Doug's integration efforts.

"We've already begun to capitalize on cost synergies and identify revenue growth opportunities," Segal said.

Diluted loss per share was 53 cents US, compared with two cents a year earlier.