Mattel lifts profit, overcomes Barbie sales dip; shares jump

Earnings rose to $1.14 a share, excluding some items, Mattel said in a statement.

Mattel, the manufacturer of Barbie and other popular toys, posted third-quarter profit that beat analysts’ estimates even as lower-than-anticipated sales led the company to trim its outlook for full-year revenue.

Earnings rose to $1.14 a share, excluding some items, Mattel said in a statement Wednesday, beating the 94-cent average of analysts’ estimates compiled by Bloomberg. Mattel left its full-year profit forecast unchanged.

Revenue declined 3.9% to $1.84 billion in the period, compared with analysts’ estimates of $1.86 billion. Mattel now expects sales for the year to be flat or down slightly from 2023, a change from its earlier assumption of comparable revenue.

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“The priority for this year was growing profitability, expanding margin and generating significant free cash flow,” Chief Executive Officer Ynon Kreiz said in an interview. “We’re executing very well against our cost-savings program.”

Mattel shares rose 4.4% to $18.56 in extended trading after the results were announced.

Much of the El Segundo, California-based company’s profit growth in the quarter was the result of lower costs, including Mattel’s supply chain expenses, Kreiz said.

The company forecasts a return to sales growth this quarter and expects to outpace the toy industry generally, Chief Financial Officer Anthony DiSilvestro said on a conference call with investors. Margins in the period will be held back by inflation and a ramp-up in advertising, he said.

Sales in Mattel’s dolls segment slumped 14%, primarily due to lower demand for its flagship product compared with last year, when Greta Gerwig’s Barbie film drove purchases. Excluding added revenue from the Barbie movie, Mattel’s sales rose from a year earlier, Kreiz said.

Sales of dolls and infant products fell 3%, while vehicles, driven by Hot Wheels miniature cars, increased 12%. That brand’s performance will bolster Mattel’s revenue in the crucial holiday season, Kreiz said, along with demand for American Girl and Fisher-Price, which is introducing new products.

Kreiz has said he expects Mattel shares to climb as the company returns to sales growth in 2025 and evolves its toy brands into film and television franchises, following the example set by the Barbie movie. Analysts forecast a 3% gain in 2025, according to data compiled by Bloomberg.

Toy company stocks are trading below recent peaks set in 2022 during the Covid-19 pandemic, when families were trapped at home and parents loaded up on products to occupy their children.

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