The first six months of the year have been tough for the U.S. toy industry, but many are optimistic about the second half of the year.
Hot off the global success of Barbie: The Movie last week, Mattel kicked off second quarter earnings season with news that net sales fell 12% to $1.08 billion. The company says that its Q2 earnings are in line with expectations as it believes the unusual retail correction is planted firmly in the rearview mirror. North America took the biggest hit with net sales and gross billings each declining by 18%. Overall, the earnings and profit in Q2 beat Wall St. estimates.
Mattel’s second quarter financial results were in-line with our expectations. We significantly increased free cash flow and continued to gain market share. Importantly, this moment will be remembered as a key milestone in our company’s history with the release of the 'Barbie' movie, our first ever major theatrical film. The 'Barbie' movie is a showcase for the cultural resonance of our IP, our ability to attract and collaborate with top creative talent, and the capabilities of our franchise management organization. This also speaks to the potential of Mattel Films and the significant progress of our strategy to capture the full value of our IP.”
As expected, global gross billings for Mattel’s Dolls category spiked 10%, but those increased orders came from Disney Princess, Disney Frozen, and Monster High and were partially offset by a decline in Barbie.
Elsewhere, worldwide gross billings in Vehicles spiked 11% globally as Hot Wheels continues to be on a roll. Gross billings for the Infant, Toddler, and Preschool category fell 28% primarily due to declines in Fisher-Price; while Action Figures, Building Sets, Games, and Other dipped a whopping 39% which Mattel attributes largely to Action Figures timed with last year’s movie releases.
“While comparisons improved from the first quarter, our second quarter financial results were negatively impacted as retailers continued to manage inventory levels and by some overall industry softness,” adds Mattel Chief Financial Officer Anthony DiSilvestro. “At this point, we believe the retail inventory correction is mostly behind us, and we look forward to meeting consumer demand for our product, as we enter the second half of the year and all-important holiday season. Given our year-to-date performance and outlook for the balance of the year, we are reiterating our guidance.”
Mattel believes that an upswing in the back half of the year will lead to overall net sales for 2023 being comparable or essentially flat when compared to 2022.
