Dive Transient:

  • Mattel reported that gross sales had been flat, at $1.8 billion, within the third quarter whereas working revenue rose barely yr over yr, in accordance with an organization launch.
  • Adjusted for restructuring prices, asset gross sales and different one-off occasions, working revenue fell by 1%. For the yr, Mattel, citing market volatility, trimmed its steerage on margin and income, with the decrease finish of its adjusted EBITDA vary revised down by $50 million. 
  • In a name with analysts, Mattel CEO Ynon Kreiz mentioned the corporate, primarily based by itself analysis, expects shoppers to spend as a lot or extra through the vacation season in comparison with 2021. 

Dive Perception:

Kreiz projected some optimism after Mattel signaled it could pull in much less revenue this yr and may must mood its expectations for 2023. 

Mattel nonetheless expects development on the highest line, with estimates of an 8% to 10% improve in web gross sales, with a lot of that development prone to be riven by a few of its high names, together with Scorching Wheels, Fisher-Value and Thomas & Associates, mentioned Chief Monetary Officer Anthony DiSilvestro.

On the earnings name, Kreiz pointed to the sector’s historic resilience throughout financial turbulence. The corporate additionally famous in an investor presentation that it was the No. 1 toy firm within the U.S. and globally in its main classes in Q3, primarily based on NPD information.

“We’re seeing purposeful manufacturers and high quality toys resonating with shoppers now greater than ever,” he mentioned. “And we imagine that essential large manufacturers, high quality merchandise will find yourself profitable the season. That is what we’re centered on. That is the place we excel.” 

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The place Mattel expects to really feel some ache is on revenue, with anticipated margins down from final yr. Nonetheless, the corporate estimates its adjusted EBITDA and earnings to develop over final yr. 

In Q3, Mattel really noticed its gross margin improve, with value will increase and price cuts offsetting inflation within the firm’s personal prices. On the decision, Kreiz mentioned that the corporate “efficiently” put in place value will increase for purchasers through the yr. “Whereas it’s nonetheless early, we now have not seen a significant impression on shopper demand,” he added.

Nonetheless, the corporate has loads of challenges. In reducing again steerage, Mattel mentioned it’s “working in a difficult macro-economic atmosphere with larger volatility, together with inflation, which will impression shopper demand.” The corporate added that there might be “additional volatility” and “sudden disruption” in areas like change charges, inflation, world financial circumstances, shopper demand and labor market fluctuations. 

However up to now Mattel is weathering the present atmosphere with much less monetary ache than rival Hasbro, which suffered a greater than 30% drop in working revenue in its shopper merchandise unit in Q3 and gross sales falling 15% throughout the corporate.