Dive Brief:
- Hasbro’s Q3 revenue fell 10% to $1.5 billion, as 40% growth in Wizards of the Coast and its digital gaming segment failed to offset an 18% drop in consumer products and a 42% plunge in entertainment, mostly due to the writer and actor strikes, the toy maker said Wednesday. The company swung to a $171.1 million loss, from $129.2 million in net earnings a year ago.
- The performance was in sharp contrast to rival Mattel, where Barbie helped push Q3 net sales up 9% to $1.9 billion.
- But Mattel’s net income dropped by half year over year to $146.3 million. While the company raised full-year guidance for margins and other variables, its sales expectation remains the same, implying uncertainty at the holidays, according to UBS analysts led by Arpine Kocharyan.
Dive Insight:
At 64 years old, Barbie may be nearing retirement age, but instead the doll and her IP are in the midst of a blockbuster revival.
Mattel said that gross billings for dolls rose 27% to $884 million, driven by growth in Barbie, Disney Princess and Disney Frozen, and Monster High. On a conference call this week, Mattel Chief Financial Officer Anthony DiSilvestro, citing Circana data, told analysts that the company outperformed the toy industry in the dolls category, gaining over 670 basis points of market share year-to-date, with Barbie the number one doll property globally.
But Mattel is hardly focused only on dolls, or even toys generally. CEO Ynon Kreiz told analysts that the success of the Barbie movie “speaks to the potential of Mattel films and the significant progress of our strategy to capture the full value of our IP.”
“The Barbie movie, Mattel's first major theatrical release, became a global cultural phenomenon, breaking numerous box office records and becoming the highest grossing film of 2023,” he told analysts. “The movie was a showcase for the cultural relevance of our ability to attract and collaborate with top creative talent and our demand creation capabilities at a global scale. The movie has broadened Barbie's fan base which will be an important contributor for the brand as part of our long-term franchise management strategy.”
The company has since greenlit more entertainment, including a Barbie series, a Monster High animated series and live action movie sequel, a Polly Pocket special, new seasons of “Thomas & Friends,” a Pictionary game show and an animated Hot Wheels series on Netflix.
Hasbro is also chasing entertainment revenue, but was stalled in the period by the writers and actors strikes. The company is also dedicating resources to expense cuts and a turnaround.
Each company signaled both optimism and caution for the fourth quarter. Given its momentum, Mattel expects a strong holiday, though Kreiz said the company expects the industry to be down mid-single digits compared to the season last year. Bank of America analysts earlier this month cited soft demand for toys in the fourth quarter as a risk to both companies.
Hasbro CEO Chris Cocks said the company expects this holiday season to be “late breaking” and heavily reliant on discounts, but otherwise difficult to forecast.
“We have a cautious outlook on the holiday,” he said. “And I think anyone who says they know how the holiday is going to go, they must have a crystal ball because this has been a tough one to predict.”
