Mattel (MAT.O) smashed third-quarter results estimates on Wednesday and lifted its annual earnings forecast ahead of the key holiday season, as the toymaker benefited from the box-office success of the “Barbie” movie.
However, shares of the company were down about 6% in extended trade, after gross billings in its American Girl segment dropped 13% in the quarter.
“It is a little disappointing to see the continued slide of American Girl. I think there is some opportunity for them to rethink that brand,” said James Zahn, editor-in-chief of trade magazine The Toy Book.
The company also booked a one-time charge of $212 million, leading to a 50% drop in net income, but its adjusted per-share profit of $1.08 beat analysts’ estimate of 86 cents, according to LSEG data.
Mattel’s Dolls segment recorded a 24% rise in worldwide gross billings, or the amount invoiced to customers, in constant currency terms, thanks to the “Barbie” movie.
“Barbie” in July set records as the biggest opening of the year and the company is banking on the hype around the movie to help overcome what is expected to be a softer shopping season as sticky inflation crimps household budgets. read more
Mattel also shrugged off concerns around inventory destocking from retailers as it heads into the crucial holiday period.
Kreiz told Reuters that Mattel had “greater retail support compared to the prior year, with more shelf space, more representation on major holiday catalogs and more advertising”.
“We expect to see an accelerated growth rate in the fourth quarter with significant gross margin expansion,” Kreiz added.
The company now expects annual adjusted earnings per share between $1.15 and $1.25, compared with $1.10 to $1.20 estimated earlier.
Net sales rose 7% in constant currency to $1.92 billion, handily beating Wall Street expectations.
