Dive Brief:
- Mattel’s fourth-quarter net sales were $1.6 billion, up 16% from $1.4 billion the prior year. The company on Wednesday reported $147 million in net income, a more than ninefold increase from $16 million the prior year, and operating income of $140 million, up 77% from $79 million a year ago.
- The company’s full-year net sales of $5.4 billion were flat, with operating income at $561.7 million, down nearly 17% year over year. Net income for the year was $214 million, down nearly 46%, and included a non-cash charge of $161 million relating to tax asset-related changes.
- Mattel is targeting $200 million in cost savings by 2026. Its board of directors also approved a multiyear $1 billion share repurchase program, after the company repurchased $203 million in shares in 2023.
Dive Insight:
Mattel CEO Ynon Kreiz described 2023 as “a milestone year” for the company, which is the home of dozens of iconic toy and game brands, including Barbie, Hot Wheels, Fisher-Price and Uno.
“We extended our leadership in our key toy categories and gained significant share overall, achieved extraordinary success with the Barbie movie and further strengthened our financial position,” Kreiz said, according to an earnings call transcript from Seeking Alpha.
According to Kreiz, Barbie was the No. 1 doll property globally and the second-place toy property overall thanks to the “Barbie” movie, which was the highest-grossing movie at the box office in Warner Bros. history. Mattel continues to lean more into intellectual property partnerships. Mattel Films recently announced its first animated movie, “Bob the Builder.”
“The breakout success of the award-winning Barbie movie was a showcase for our entertainment strategy and cultural relevance of our brands outside the toy aisle,” Kreiz said during the call. “Mattel is in the strongest financial position it has been in years, with significant free cash flow generation, an optimization program and a new share repurchase authorization.”
Two years ago, Kreiz said the company’s earlier multiyear turnaround efforts had succeeded. However, although the company ended 2023 “with the strongest balance sheet we have had in years,” Kreiz said Mattel remains focused on achieving cost savings. The company on Wednesday announced a new cost-savings initiative to drive efficiencies, cut costs in its global supply chain and improve profitability.
A new chief strategy officer will help identify profitability and growth opportunities. Mattel on Thursday announced that Christopher Farrell would take on that role, which also focuses on optimizing business performance. Farrell joins Mattel from Ahold Delhaize, where he was the global head of mergers and acquisitions. He also served as chief strategy officer at Authentic Brands Group.
Chief Financial Officer Anthony DiSilvestro said Mattel previously achieved total annualized savings of $343 million between 2021 and 2023. That exceeded its initial target of $250 million and a revised goal of $300 million. “We recognize the importance of managing our cost structure and continuing to expand margins as well as generating savings that can be reinvested in the business,” DiSilvestro said during the call.
This year is the Barbie brand’s 65th anniversary and Mattel plans product launches to celebrate that moment. Barbie saw 24% growth in Q4 across the brand, toys and movie-related benefits. The movie continues to play well and lifted the brand, said Kreiz, who added the brand’s strength extends beyond the movie. As a result of the “Barbie” movie’s success, Mattel will face tough performance-related comparisons this year, Bank of America Securities Research Analyst Jason Haas said in a Thursday note. However, “we believe in the company's ability to grow its IP-driven toy business and continue expanding its entertainment offering.”
In contrast, segment rival Hasbro in December announced cuts of over 1,000 jobs in pursuit of $350 million to $400 million in cost savings by the end of 2025. That toy manufacturer’s brand portfolio includes GI Joe, Nerf, My Little Pony, and Transformers, which also had a related movie release last year. In Q3, Hasbro reported net revenue fell 10% to $1.5 billion, down from $1.7 billion year over year, and it posted a net loss of $171 million for the quarter. The company reports fourth quarter and full year earnings on Tuesday.
