Key Highlights
- Mattel Inc. has reported an increase in quarterly profit and has surpassed the estimated sales.
- The demand for action figures and games has increased—especially the ones based on upcoming movies.
- The gross billings for Barbie has increased to 8% in the quarter, while Hot Wheels reported a 31% increase.
The pandemic has hard hit the retail industry. With the restrictions and limitations on the supply chain, even the bigger retail companies witnessed a slump. Surprisingly, Mattel Inc. has reported an increase in quarterly profit and has surpassed the estimated sales. The biggest contributor to these surprising sales has been the popular brands’ Barbie and Hot Wheels.
Barbie and Hot Wheels have always been a favorite in the toy industry. With the holiday season, these toys are back in demand and have surged Mattel’s shares. The company’s shares closed to nearly 11% in regular trading and have reported buyout interest from firms including L Catterton and Apollo Global Management Inc. which increased the shares to 3% in extended trading.
A comment released by the Chief Executive, Ynon Kreiz, “Following such a strong holiday period, retailers were out of stock, so they restocked more for the first quarter, and still expect to grow in the second quarter.”
Mattel was affected by supply chain disruption
Previously, the supply chain disruption, closed factories, and delayed shipping had affected the launch of many products during the holiday shopping season. Mattel’s efforts failed to pull forward deliveries and reroute goods.
However, the Q2 has started strong, the demand for the action figures and games has increased—especially the ones based on upcoming movies including ‘Jurassic World: Dominion’, ‘Minions: The Rise of Gru’ and ‘Lightyear’.
Barbie & Hot Wheels sales profitable
In Q1, Mattel experienced a margin decline of 70 basis points as the price hikes failed to cover the rising input costs and transportation expenses. Despite this, the company has adjusted the profit to 8 cents/share, whereas the analysts had estimated a loss of 4 cents.
The gross billings for Barbie has increased to 8% in the quarter, while Hot Wheels reported a 31% increase. The seasonally slow Q1 has not affected Mattel, as its net sales increased 19% to $1.04 billion which was beyond the estimated average.
