Last yr was all about Barbie for toy maker Mattel Inc., after a box-office blowout for the “Barbie” film and a corresponding bounce in doll gross sales. But in 2024, the corporate is trying to minimize prices, and expects weaker demand for its iconic doll and throughout its toys total.
Mattel
MAT,
on Wednesday mentioned it’s concentrating on annualized financial savings of as much as $200 million between this yr and 2026 through a brand new cost-cutting drive. That effort, executives mentioned, consists of plans to shut a plant in China. Still, the corporate introduced a $1 billion share-buyback program, citing its robust stability sheet.
Shares of Mattel gained 1.5% after hours.
Scores of corporations, inside and out of doors of the toy business, have introduced cost-cutting efforts over the previous a number of weeks, as traders search out greater revenue margins following a yr through which recession considerations hung over the economic system. Hasbro Inc.
HAS,
one in all Mattel’s foremost rivals, mentioned in December that it was planning layoffs.
Toy demand has cooled thanks to 2 years of inflation-fueled value hikes for fundamental requirements. Retailers have taken a cautious method towards stocking their cabinets, after getting caught two years in the past with too many toys and electronics that individuals didn’t need.
On Mattel’s fourth-quarter earnings name on Wednesday, Chief Executive Ynon Kreiz mentioned developments within the toy business this yr wouldn’t be as unhealthy as final yr.
“We expect the toy industry to decline in 2024, although at a lesser rate than 2023,” he mentioned. “The anticipated decline is due to a lighter [toy-related] theatrical-film slate and the impact of the shift in consumer-spending patterns towards experiences and services, which we believe will moderate over the year.”
Chief Financial Officer Anthony DiSilvestro mentioned on Mattel’s name that the corporate expects a decline in doll gross sales this yr “as we wrap the benefits of the ‘Barbie’ movie.”
Mattel — recognized for its Barbie and Hot Wheels toys and, more and more, its efforts to show them into content material — reported fourth-quarter internet earnings of $147.3 million, or 42 cents a share. That compares with internet earnings of $16.1 million, or 4 cents a share, in the identical quarter in 2022.
Adjusted for issues like severance, product remembers and adjustments to deferred tax belongings, Mattel earned 29 cents a share. Sales rose 16% to $1.62 billion.
Analysts polled by FactSet anticipated Mattel to report adjusted earnings per share of 31 cents, on income of $1.65 billion.
“Execution on our toy strategy was strong and we made meaningful progress in entertainment across film, television, digital and publishing,” Kreiz mentioned within the firm’s earnings launch.
“We ended 2023 with the strongest balance sheet we have had in years, putting us in an excellent position to execute our strategy to grow Mattel’s IP-driven toy business and expand our entertainment offering,” he continued.
Mattel reported earnings after the important thing holiday-shopping season, and as analysts weigh the gross sales influence from the success of the “Barbie” film launched final summer season. Mattel executives have mentioned they need to make extra movies based mostly on a few of its different well-liked toys, and switch “Barbie” into a movie and TV franchise.
The Wall Street Journal reported final week that activist investor Barington Capital had taken a stake in Mattel, noting that Barington believes the corporate ought to contemplate “pursuing strategic alternatives” for its Fisher-Price and American Girl companies. Mattel on Wednesday mentioned that American Girl could be folded into its North America business group.
Bank of America analysts on Tuesday mentioned Mattel and Hasbro had been among the many corporations that had been “most at risk of direct impact” from delivery disruptions within the Red Sea. Yemen-based Houthi fighters against Israel’s battle in Gaza have attacked ships within the space, forcing prolonged detours and driving up delivery prices. Mattel, the analysts famous, bought round 24% of its whole gross sales from the Europe, Middle East and Africa areas in 2022.
Other analysts, like D.A. Davidson’s Linda Bolton Weiser, have noticed that Mattel, like Hasbro, is comparatively well-insulated from Red Sea delivery disruptions. DiSilvestro mentioned throughout Mattel’s earnings name that, to this point, the disruptions and better delivery prices had “not had a material impact” on the corporate.
Shares of Mattel are up 24.7% over the previous 12 months.
Source web site: www.marketwatch.com
