Toy industry earnings season is officially underway.
Mattel delivered solid sales results in 2022 despite net sales dropping 22% in the fourth quarter. The El Segundo-based toy and entertainment company says that net sales for the full year hit $5.43 billion, flat when compared to 2021 or up 3% in constant currency.
The Q4 challenges echo those faced by the broader toy industry last year as inflation and other macroeconomic concerns impacted sales alongside continued residual challenges from the pandemic era.
“Our fourth quarter results were below our expectations, as the macroeconomic environment was more challenging than anticipated,” says Mattel Chairman and CEO Ynon Kreiz. “While less than expected, POS grew in the quarter and the full year and we achieved growth in net sales in constant currency for the fourth consecutive year. The increase in consumer demand for our product speaks to the strength of our portfolio as a whole, even in a challenging environment. 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.”
For the full year, net sales and gross billings in North America increased 1%, primarily fueled by growth in Vehicles (including Hot Wheels), Action Figures, Building Sets, and Other (including Lightyear and Jurassic World).
American Girl continues to slide with a 16% decline in net sales last year attributed to lower sales of the 2022 Girl of the Year and historical character dolls.
On a global level, gross billings for dolls slid 9% due to declines in Barbie, American Girl, and Spirit, partially offset by the relaunch of Monster High and the early shipment of Disney Princess and Disney Frozen products. Infant, Toddler, and Preschool slipped by 8%.
The big wins for the year came in the action aisles.
Worldwide gross billings for Vehicles hit $1.4 billion last year, a 16% spike primarily driven by growth in Hot Wheels.
Action Figures, Building Sets, Games, and Other were up 7% with gross billings topping $1.3 billion. The gains were powered by growth in Action Figures and MEGA Building Sets but partially offset by declines in plush and games.
“Despite the challenges in the fourth quarter, we outpaced the industry and gained market share,” says Mattel’s Chief Financial Officer Anthony DiSilvestro. “In the full year, we strengthened our financial position, further reduced our debt, and improved our leverage ratio. With our improved balance sheet and outlook for increased free cash flow, we expect to resume share repurchases in 2023.”
Mattel leadership will speak with investors and analysts to discuss the earnings and guidance for 2023 on a call this afternoon.
