Mattel posts a surprise profit as Barbie sales fall despite movie hype
The company made $27.2 million, or 8 cents per share, in the quarter ended June 30. That compares with net income of $66.4 million, or 18 cents per share, in the year-ago period.
Published: 27th July 2023 11:37 AM | Last Updated: 27th July 2023 11:37 AM | A+A A-
Barbie-themed merchandise is displayed in a special section at Bloomingdale's, in New York. (Photo | AP)
NEW YORK: The “Barbie” blockbuster movie created magic at the box office, but the iconic doll's parent Mattel is bracing for it to make a big difference in the toy aisles.
Mattel Inc. on Wednesday turned in a surprise profit and better sales during the second quarter than analysts expected. But worldwide sales of Barbie to retailers excluding adjustments fell 6% in the quarter that ended June 30 as promotions were shifted to align with last weekend's release of the iconic doll's first live-action picture. Mattel executives told analysts during an earnings call following the release that sales have improved in July, and it expects the movie will have a halo effect on the brand for years to come.
The film — which set an opening weekend record last week for the year — splashed worldwide attention on the doll and boosted shares of the company in the past month. Ahead of the opening, Mattel created a product marketing blitz with more than 100 brands plastering pink everywhere. But it won't likely see the full benefits of the tie-ins for a while — and consumers are still spending cautiously on toys.
“We significantly increased free cash flow and continued to gain market share," said Ynon Kreiz, chairman and CEO of Mattel in a statement. “Importantly, this moment will be remembered as a key milestone in our company’s history with the release of the Barbie movie.”
The movie release comes also at a time when Kreiz, who came to Mattel’s helm in 2018, is turning the toy company into an intellectual property house, with “Barbie” the first of 14 live-action movies planned with major studios.
The company made $27.2 million, or 8 cents per share, in the quarter ended June 30. That compares with net income of $66.4 million, or 18 cents per share, in the year-ago period.
Sales fell 12% to $1.09 billion from $1.23 billion in the year-ago quarter as retailers trimmed orders for toys amid economic uncertainty.
Analysts were expecting a loss of 3 cents-a-share on sales of $1 billion. Anthony DiSilvestro, chief financial officer of Mattel, noted that the “retail inventory correction” is behind it.
Net sales and gross billings in the North American segment decreased by 18% during the second quarter. Gross billings are a metric that reflects sales to retailers before adjustments.
For the second quarter, worldwide gross billings for the doll category was $441 million, up 10% as reported, or 9% in constant currency, versus the prior year, primarily driven by Disney Princess and Disney Frozen, and Monster High, partially offset by a decline in Barbie.
Mattel reiterated its financial outlook despite a surprise profit in the quarter.
Mattel stuck to its full-year outlook, which it projects to be flat from last year, and adjusted profit per share between $1.10 and $1.20 per share.
Shares slipped 2% in after-market trading on Wednesday after adding 15 cents to $21.32 per share.
“While the Barbie blockbuster didn’t happen in Mattel’s Q2, its takeover of pop culture shows the huge potential its IP has, “ said Insider Intelligence Principal Analyst Jeremy Goldman in a statement. ”It also speaks to Mattel’s ability to work with key Hollywood players to bring its properties to life in a media-savvy manner."
