Mattel reported Q3 earnings that reflect net sales of $1.75 billion, flat compared to the same period last year. That number is up 3% in constant currency — a metric that Mattel has used for years, but one that is increasingly popping up in earnings reports across the board as companies seek to lessen the blow of unfavorable foreign exchange rates.
“This was a good quarter for Mattel, with the ninth consecutive quarter of net sales growth in constant currency,” says Mattel Chairman and CEO Ynon Kreiz. “We believe our fundamentals are strong and our world-class leadership team and global organization are executing with excellence. Our results reflect the resilience of our diversified portfolio and the success in executing our strategy, despite the challenging macro-economic environment. We look forward to the all-important holiday season, and believe we are on track to achieve another growth year for the company.”
While Q3 presented challenges, Mattel’s year-to-date sales for the first nine months of 2022 spiked 10% as reported, and 13% in constant currency versus last year.
Mattel says that its consumer price increases have been implemented across the board and have not seen any type “of meaningful impact on consumer demand.” That said, the cost of doing business made a hit on earnings per share (EPS) and has resulted in a slight update to the company’s guidance reflecting lower EPS and EBITDA. The company says that increased market volatility has prompted a new look at expectations for 2023 that will be offered during its Q4 and full-year earnings report.
In North America, sales declined 3% versus last year as gross billings dipped 4% due to declines in infant, toddler, and preschool (including Fisher-Price and Thomas & Friends), and action figures, building sets, games, and other (including Jurrasic World and Lightyear), and dolls (including Barbie). The declines were offset in part by growth in vehicles (including Hot Wheels).
American Girl hit a rough patch again with a 6% drop in net sales and a 5% dip in gross billings.
Despite the Q3 dip, Mattel’s gross billings on a global level are up 10% year-to-date, up 13% in constant currency.
Some big wins in Q3 include global growth in Hot Wheels and Matchbox, Monster High, Karma’s World, Polly Pocket, and the action figures category, including Lightyear and Jurassic World.
According to Mattel’s Chief Financial Officer Anthony DiSilvestro, Hot Wheels had a record third quarter with a 17% spike in sales.
Heading into the holiday season and Q4, Mattel says that it has secured more shelf space and retailer promotional support and that it has a better in-stock position this year versus last year. Additionally, Kreiz explained on a call with analysts and investors that this fall marks a return to promotional pricing and that the company will be increasing its advertising efforts to drive demand through the holiday season. Mattel also says that its products have increased visibility on hot holiday toy lists this season.