Mattel's Barbie Sales Fail to Rebound During the Holiday Quarter

In its fourth-quarter results, Barbie-maker Mattel fell well below Wall Street's expectations after holiday sales failed to offset slowing consumer demand.

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The company's shares fell more than 9% in premarket trading this Thursday.

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Anthony DiSilvestro, CFO, attributed the low performance to fewer orders from retailers and higher inventory costs.

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As demand has slowed amid inflation, the company had hoped the "all-important holiday season" would boost sales.

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“Based on the macroeconomic environment, our fourth quarter results were below our expectations,” CEO Ynon Kreiz said in the earnings announcement on Wednesday.

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Refinitiv compiled an average of analysts' estimates for Mattel's fourth quarter, and here's how it performed:

• Adjusted earnings per share: 18 cents vs. 29 cents expected
• Revenue: $1.40 billion vs. $1.68 billion expected

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In the three months that ended Dec. 31, the company reported a net income of $16.1 million, or 5 cents per share, down from $225.8 million, or 64 cents per share.

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In early last year, the toy giant was confident that it would continue riding its pandemic momentum, driven by toy-buying parents who wanted to keep their children entertained at home. Despite inflation and currency headwinds, the company expects customers to be little affected by price increases. In spite of this, customers seemed to feel the pinch as the company's toys, such as Barbie and Hot Wheels, became increasingly expensive, and the company's fourth-quarter sales declined 22% from the prior year.

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Mattel's North America segment decreased by 26% during the period due to declining sales of Fisher-Price, dolls, and action figures. An 18% decline in international sales was also reported.

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According to the company, the company's earnings per share for 2022 were $1.11, below its own expectations. The company lowered its forecast from $1.32 to $1.42 for the month of October.

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As the company enters its 2023 fiscal year, Mattel anticipates adjusted earnings per share between $1.10 and $1.20. The company expects continued sales declines in the first half of the year as retailers reduce inventories.

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Industry-wide, toy manufacturers have been under pressure from inflation. As a result of weak holiday performance, rival toy maker Hasbro cut 15% of its workforce in January. As macro pressures mounted and Hasbro adjusted to a change in leadership, it was more conservative than Mattel entering the fiscal year.

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As consumer demand slows from its pandemic highs, Mattel has been developing non-manufacturing ventures using the intellectual property of its toy brands.

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The "Barbie" movie, starring Margot Robbie and Ryan Gosling, will be released on July 21. Last April, Mattel announced that J.J. Abrams's Bad Robot would produce a Hot Wheels movie in partnership with Warner Bros. Discovery.

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As of now, the company is working on a dozen more feature films, including ones for brands like Polly Pocket and Barney.

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This project is part of Kreiz's plan to turn Mattel into a multi-segmented toy empire by using the "built-in fanbase."