Toy manufacturer Mattel’s sales grew strongly in the third quarter, exceeding analysts’ forecasts thanks to a surge in doll sales derived from the success of the Barbie movie as well as an increase in sales of Hot Wheels cars, according to a company earnings release on Wednesday. “Consumer demand for our product increased in the quarter, and we continued to outpace the industry. Our results benefited from the success of the Barbie movie, which became a global cultural phenomenon, and marked a key milestone for Mattel,” Ynon Kreiz, chairman and CEO, said in the release.
The company has broken a streak of declining sales. Third-quarter earnings show that net sales increased by 9% to $1.92 billion. But because sales had been falling sharply in the first half of the year, revenue still decreased 6% in constant currency to $3.8 billion in the first nine months of the year. The company hopes that Barbie dolls will continue to be a sales driver in the Christmas quarter, an essential period for toy companies.
The Barbie film, directed by Greta Gerwig and starring Margot Robbie, is the highest grossing movie of 2023, earning more than $1.4 billion worldwide, and it has become a great promotional vehicle for Mattel’s star toy. Mattel, as co-producer, is entitled to a portion of the film’s revenue. The company now wants to bring more of its brands to movie theaters and television screens, and is already developing films based on its Hot Wheels cars, among others.
In the third quarter, worldwide gross billings for dolls were $884 million, up 27% from the same period last year. The company attributes this increase to the growth in sales of Barbie, Disney Princess, Disney Frozen and Monster High products. Barbie accounted for two-thirds of doll sales. The group’s second most important brand, Hot Wheels, also grew 22% to $454.8 million in the quarter. In contrast, the company suffered sales declines at Fisher Price and its division of action figures, building sets and other games.
“We are very well positioned competitively and expect to gain market share in the fourth quarter and full year,” said Kreiz. But gaining market share is not the same as growing. The traditional toy business has been on the decline for several years, displaced by video games, electronics and other products.
Despite the growth in the third quarter and good omens for the holiday season, Mattel still expects full-year sales to remain stable, near the 2002 figure of $5.44 billion. The company has slightly raised its adjusted earnings per share forecast for 2023 from $1.10-1.20 to $1.15-1.25, but that has not been enough for investors, and the company’s shares reacted strongly downwards on the stock market.
Operating income was $474 million, an increase of $82 million, although if this figure is adjusted for one-time items it would grow by $108 million to $506 million. Profit for the quarter fell 50% to $146 million, but this is due to a provision of $212 million for the valuation of deferred tax assets abroad. Adjusted profit grew 32%, according to the company.
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