By Gary Symons
TLL Editor in Chief
Mattel and Hasbro reported double digit decline in revenues, confirming a slow-down in the toy sector and consumer goods generally.
The drop follows years of strong performance in the toy industry, partly due to parents spending more on toys to entertain the young ‘uns at home during the COVID-19 pandemic.
Now, however, high inflation and low consumer confidence have combined to drive down spending.
For that reason, both companies have said the results are not indicative of problems at the company, and instead said the long-term outlook is solid.
Mattel’s net sales dropped by 22% year-over-year to $815 million, with the decline spread across all segments other than vehicles, which actually grew by 1%.
By contrast, two of Mattel’s top performing brands were hit particularly hard. Its Barbie segment, which leads the doll category globally, dropped by 41% to $177 million, while Fisher Price dropped 27% to $125.7 million.
That all resulted in a net loss of $106 million for the quarter, as opposed to the $21 million of net income in 2022. Mattel posted an overall operating loss of $115 million, a decrease of $195 million.
The drop in net revenues for the Barbie line is a particular concern, as the brand is among the most reliable sales machines for Mattel. It is the most popular doll franchise in the world, and even more importantly, even during periods when Mattel revenues declined, Barbie’s revenues held fast or even increased, particularly since 2018.
Barbie is also a cultural icon which has spawned its own multimedia empire, including books, film, TV shows, comics and video games. In 2021 Barbie sales marked its highest revenues yet, posting $1.7 billion worldwide.
Mattel CEO Ynon Kreiz said reduced consumer demand and retail inventory management were largely to blame, but says Mattel continues to outperform most toy companies.
“While retail inventory management impacted the first quarter’s results, the underlying business performed well,” he said. “Mattel achieved growth and gained market share, per Circana (a retail tracking service).
“We expect to outpace the industry, gain market share, and achieve our full year guidance,” Kreiz added. “We are well positioned to continue executing our multi-year strategy and create long-term shareholder value.”
The company’s CFO, Anthony DiSilvestro, also said improvement can be expected soon, as global logistics returns to something approaching normal after years of turmoil.
“We expect consumer demand to be positive for the full year and for revenue comparisons to improve, as shipping patterns revert to historical trends in the second half,” DiSilvestro predicted.
Not surprisingly, the picture was very similar at Hasbro, which earned $1 billion in net revenue, a 14% drop YOY. Hasbro’s consumer product division took the biggest hit, generating 23% less revenue, while its entertainment segment dropped by 19%, largely due to the fact Hasbro has released less content.
Hasbro’s Wizards of the Coast and digital gaming segment was the only division seeing growth this quarter, with net revenue up by 12% to US$295 million. The company says this result was driven by strong sales performances by Phyrexia: All Will Be One booster packs and reprint sets for Magic: The Gathering. The film Dungeons & Dragons: Honor Among Thieves was also seen as a success that has brought more interest to the game.
Wizards of the Coast has been Hasbro’s strongest performing division for years now, reflecting a strong interest in group board gaming.
Hasbro CEO Chris Cocks says that while Hasbro is focused on reducing inventory this quarter, the overall business is performing very well, and the company is encouraged in the strong consumer interest in its intellectual properties.
“The global Hasbro team continues to execute our strategy to unlock the value of our rich IP library across our growth priorities including in gaming, direct-to-consumer and licensing,” he said.
Speaking of licensing, Mattel and Hasbro surprised industry observers as they announced a wide ranging licensing deal involving Hasbro’s Transformers and Monopoly brands, and the Hot Wheels, Barbie and UNO brands for Mattel.
Specifically, Hasbro will create a Barbie-branded version of its Monopoly games for release this fall. Mattel will similarly produce a Transformers branded UNO game this year, and will also release a Transformers branded slate of Hot Wheels vehicles in early 2024.
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All this cross-branding magic comes against the backdrop of two major theatrical releases this summer, with Hasbro’s Transformers: Rise of the Beasts from Paramount debuting on June 9, and Mattel’s Barbie from Warner Bros. on July 21.
“With the major theatrical releases of the Transformers and Barbie movies in summer 2023, we’re excited to bring brand-new play experiences to fans, families, and movie and toy lovers all around the world,” said Casey Collins, Hasbro’s President of Global Licensed Consumer Products & Business Development. “Working with iconic brands in pop culture truly showcases our strategy in action, as we continue to expand our product experiences for audiences everywhere.”
According to the retail tracking service Circana, Barbie, Hot Wheels, UNO and Monopoly are the top selling brands in their respective categories.
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