Mattel saw its toy sales and earnings fall, but expects to see growth in 2023 along with the wider toy market.
“Our fourth quarter results were below our expectations, as the macro-economic environment was more challenging than anticipated,” Ynon Kreiz, chairman and CEO of Mattel, said in a statement.
During the fourth quarter, Mattel posted overall revenues from holiday season sales at $1.4b, down 22% from $1.79b a year-earlier. This meant the company failed to meet an analyst estimate of $1.68b revenue. CFO Anthony DiSilvestro attributed the low performance to fewer orders from retailers and higher costs to manage inventory.
The company said that sales in North America decreased 26% during the period, while international sales also fell by 18% and EMEA declined 16% while POS actually increased mid-single digits.
“We believe we are well-positioned to continue executing our multi-year strategy to grow our IP-driven toy business and expand our entertainment offering,” commented Ynon Kreiz. During an analyst call, he added that Mattel expects point-of-sale toy growth in 2023.
“Given continuing macro-economic headwinds and market volatility that may impact consumer demand, we expect the (toy) industry to be flat to slightly up in 2023,” he said. Against that backdrop, Mattel said it had raised its expected 2023 cost savings to $300m, from a previously targeted $250m.
Faced with slowing consumer demand after a surge during the pandemic, Mattel has been working to diversify its revenue streams, using the intellectual property of its toy brands for non-manufacturing projects.
The Barbie movie, set for release in July 2023, represents the first time Barbie has been rendered as a live-action movie. Ynon said the movie, produced in association with Sony, was in post-production ahead of its summer release. Mattel Films has also partnered with Skydance for a live-action movie based on the Matchbox toy vehicle line, and the company has also slated a Hot Wheels movie with Warner Bros.
Following the earnings report, Mattel stock fell by $2 (almost 10%), to $18.50 as investors reacted to falling profitability and weaker than expected guidance.