Last Year’s Barbie Bump Now A Barbie Slump For Mattel

Mattel has lowered its sales forecast for the year, in large part due to a 17% decline in gross billings for Barbie merchandise during the third quarter.

The Barbie brand was up against tough comparisons to last year’s third quarter, when Mattel reaped the lion’s share of what was estimated to be a $150 million bump in revenues due to the success of the Barbie movie.

The sharp drop in Barbie billings caused Mattel to downgrade its full-year net sales forecast to flat to down slightly. The company previously had forecast that 2024 net sales would be comparable to 2023’s $5.44 billion.

However, its previous guidance for full year earnings remains the same, due to higher profit margins and successfully cost-cutting.

Mattel reported after the market closed Wednesday that net sales for the third quarter were $1.84 billion, down 4% from the same period last year, below analysts expectations. Mattel beat earnings expectations, with adjusted earnings per share of $1.14, up from $1.08 per share in the third quarter of 2023.

The slightly more negative outlook for full-year sales didn’t scare investors Wednesday. They sent Mattel’s stock up more than 4% in after hours trading.

The stock, which had closed down 1.82% for the day Wednesday, at $17.78, was up 4.6% at $18.60 at 7 p.m.

Mattel Chairman and CEO Ynon Kreiz told investors in a conference call to discuss the financial results that the company expected that Barbie sales would be down following the prior year’s surge.

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“Coming into the quarter we always knew there would be a tough comp relative to the prior year, which benefited from the success of the Barbie movie,” Kreiz said. On the positive side, he said, the company offset the impact of that comp through strong gross margin performance.

“Our balance sheet continued to strengthen and free cash flow was up significantly,” Kreiz said, noting that the company’s performance was “in line with our priorities this year to grow profitability, expand gross margin, and generate strong cash flow.”

While the overall dolls category was down 14%, including the 17% drop in Barbie, the vehicles category was up 12% and the action figures, building sets, games and other toys category was up 2%.

“Mattel’s performance in Q3 was largely in line with expectations,” James Zahn, Editor-In-Chief at The Toy Book, said in an emailed reply to questions.

“The vehicles portfolio continues to grow with double-digit gross billing increases, which shows the power of brands like Hot Wheels and Matchbox,” Zahn said.

“I do think the 14% dip in dolls was a bit more than anticipated,” Zahn said. “While the company called out declines in Barbie, I’m curious if American Girl, which joined the dolls portfolio this year after being reported on its own for many years, is weighing on the category.”

Mattel; executives said during the call that they are optimistic about the holiday season. Zahn said Mattel has a number of potential holiday hits this year, including a Barbie item.

“The Mini Barbieland collection is poised to do big business,” Zahn said. “At 2.99 to $9.99, Mini Barbieland is affordable and collectible, making it a great gift. Kids can practically build a neighborhood on the tabletop and not break the bank,” he said.

The new Fisher-Price wooden line and the Imaginext Star Wars line also are doing well, Zahn said,. In addition, the Fisher-Price Rockin’ Record Player “is one of my favorite items this fall, and it’s getting some great consumer buzz,” he said.

In the call Wednesday, Kreiz reiterated what he has said throughout the year, that for Mattel and the toy industry in general, 2025 will see toy sales return to growth.

Zahn agrees. “I think real growth will return in 2025, alongside what I think might be one of the strongest product lineups for the entire industry in recent years.” he said.