Mattel says toy demand is improving, and shares are rallying
By Bill Peters
'Trends in consumer demand for our product improved through the quarter and we expect to outpace the industry and gain market share in 2024,' CEO says
Toy maker Mattel Inc. on Tuesday reported a narrower quarterly loss than expected, while holding to its full-year profit outlook and citing an improvement in demand after two years of weaker enthusiasm among customers.
Mattel (MAT) reported a first-quarter net loss of $28.3 million, or 8 cents a share, compared with a loss of $106.5 million, or 30 cents a share, in the same quarter last year. Adjusted for severance and recalls of a sleeper product, the company lost 5 cents a share.
Sales fell 1% to $810 million.
Analysts polled by FactSet expected an adjusted loss of 13 cents a share, on revenue of $834 million.
The company stuck with its full-year outlook for adjusted earnings per share of $1.35 to $1.45.
"Trends in consumer demand for our product improved through the quarter and we expect to outpace the industry and gain market share in 2024," Chief Executive Ynon Kreiz said in a statement. "We are executing our strategy to grow our IP-driven toy business and expand our entertainment offering."
Shares rose 4% after hours on Tuesday.
Mattel reported earnings as it starts to lap last year's hype surrounding the "Barbie" movie. Along with Barbie, the company has been trying to convert more of its classic toys - like Hot Wheels and Polly Pocket - into films and other content.
However, toy demand has been muted over the past two years, thanks to higher prices for core necessities. Management in February said they expected those trends to continue this year, albeit to a less severe degree than in 2023. Mattel has sought cost cuts, while still planning to buy back stock.
Chief Financial Officer Anthony DiSilvestro on Tuesday said Mattel was targeting $60 million in cost savings this year, and $200 million overall by 2026.
UBS analyst Arpiné Kocharyan, in a research note last month, said she expected a bigger rebound for the company, as new movies, like those from the "Jurassic World" and "Frozen" franchises, hit theaters potentially next year and the year after, helping toy sales in the process. Mattel has the licenses to make toys based on the "Jurassic World" and "Frozen" franchises.
"We're already designing product for 2025," DiSilvestro said at a conference last month. "We're already discussing the product lines with our major retailers. We're already getting feedback."
-Bill Peters
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04-23-24 1624ET
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