Dive Brief:
- Mattel reported net sales of $1.8 billion in Q3, up 4% year over year, according to a Thursday press release. Net income increased 27% to nearly $354 million.
- Mattel named Steve Totzke as the company’s president and chief operating officer, effective Wednesday. Meanwhile, Chief Marketing and Brand Officer Roberto Stanichi is leaving the company to join Netflix.
- Mattel lowered its full-year guidance. Net sales growth is now expected in the range of 1% to 4%, compared to its previous forecast of 3% to 6%. Operating income is now expected to be between $500 million to $570 million, compared to the previous projection of $580 million to $630 million. The revised guidance excludes tariff refunds recognized year to date and any additional refunds for the rest of the year.
Dive Insight:
Mattel has a Barbie problem.
“Barbie is a priority, but the current performance is not where it needs to be,” Roger Lynch said in his first earnings call as CEO. Gross billings in dolls were up 4% year over year to $703 million, driven by KPop Demon Hunters. But, Barbie was a drag on the category.
“Barbie is one of the most iconic and recognized brands in the world, and the number one doll globally,” Lynch said. “We know consumers respond when we bring them compelling product, content and cultural moments. Our focus is on doing that with more consistency with Barbie.”
Prior to Lynch being named CEO in September, the company had already identified the need to focus on the doll, and responded in part by launching a campaign dubbed “Barbie is Moving,” which includes brand partnerships, consumer products and new packaging, among other efforts.
Meanwhile, Hot Wheels, Mattel’s largest brand, continues to be a bright spot for the company. It is on track for its ninth consecutive record year and is approaching $2 billion in gross billings.
“Hot Wheels is perhaps the clearest example of what our brand-centric strategy can look like when we execute well,” Lynch said.
But, analysts warn, Mattel shouldn’t rely on brands like Barbie and Hot Wheels to carry the company.
“Those are iconic franchises, but that doesn't automatically translate into sales,” Emarketer analyst Zak Stambor said in written statements on Thursday. “The company needs to give consumers reasons to buy, whether through fresh products, new experiences, or tapping into the trends kids and kidults are excited about."
Tariff refunds gave Mattel’s profits a boost in the third quarter. However, "Mattel’s decision to lower its sales and profit forecasts heading into the holiday season is not the kind of news new CEO Roger Lynch wanted,” Stambor said. “He’s already under pressure from investors to turn the company around, and these results suggest he has his work cut out for him.”
The U.S. toy industry overall has had its best first-half performance in six years, jumping 17% year over year, according to a recent report by Circana.
When asked by an analyst what his catchphrase or mission statement was for the company, Lynch said, “Oh give me a break, I just got here.”
The toy company also recently named its second CFO in under 18 months. Peter Griffith was named chief financial officer a little over two weeks ago. The previous CFO, Paul Ruh, is serving as an adviser until the end of the year.
Mattel has also been pushed to explore a potential sale, first this spring by Southeastern Asset Management, then again by Ariel Investments in October.
“I want to acknowledge there’s been considerable external commentary about the company recently,” Lynch said. “As I step into the CEO role, I see significant opportunity to improve our focus and execution.”
