Mattel Inc. on Tuesday said it expected to grow both profits and sales next year and said more new products and shelf space from retailers would help momentum for the second half of this year, and the company stuck with its full-year outlook despite a mixed second quarter and worries about consumer demand.
The toy maker — known for Barbie dolls, Hot Wheels and Masters of the Universe — reported the results as it laps last year’s “Barbie” movie boom, and as it moves into mobile gaming and tries to make more films, shows and other content based on its classic toys.
Two years of inflation spurred a flight to necessities, suppressing toy demand in the process, and retailers have been cautious on stocking their shelves with new items. But Mattel MAT expects demand for its own toys to grow during the second half of this year — even though it expects the toy industry to “decline modestly” this year.
“I look forward to a good holiday season, with new product innovation, increased retail support, more marketing and promotions and new content,” Chief Executive Ynon Kreiz said on Mattel’s earnings call.
The company reported second-quarter net income of $56.9 million, or 17 cents a share, compared with $27.2 million, or 8 cents a share, in the same quarter last year.
Adjusted for severance costs and a product recall, Mattel earned 19 cents a share. Revenue slipped 1% to $1.08 billion.
Analysts polled by FactSet expected Mattel to report adjusted earnings per share of 17 cents. They expected revenue of $1.09 billion.
UBS analyst Arpine Kocharyan, in a note on Tuesday, said a lower tax rate helped Mattel’s profit.
More important, she said, was the company’s decision to hold to its full-year outlook, which called for adjusted profit outlook of $1.35 to $1.45 a share. That forecast, she said, came “amid expectations of guidance tightening given a more challenging consumer backdrop.”
Shares were up 0.8% after hours on Tuesday, after finishing the day 7.7% lower. The stock is down 8.7% so far this year, compared to a 14.1% gain for rival Hasbro Inc.
Asked about that gap during the call, Kreiz defended the company’s progress, citing improvements to the balance sheet and cash flow.
“We’re winning major licenses,” he said. “We’re having great momentum in our entertainment strategy. Of course, the ‘Barbie’ movie is a great showcase for that. This is one example, but it’s not just about ‘Barbie,’ it’s not just about movies, and there is so much more in the works.”
Mattel released the results a day after Reuters reported that private-equity firm L Catterton had made an offer to acquire the toy maker, and that rival Hasbro was weighing whether to make its own offer. The news sent shares of Mattel higher on Monday.
Mattel on Monday declined to comment on the report. But it said it was confident in its ability “to create long-term shareholder value as a standalone company.” A D.A. Davidson analyst said such offers weren’t surprising, given the overall slump in Mattel’s stock price and its higher free cash flow.
Stifel analysts, in a research note last week, pointed to other issues. They said Mattel is lapping the benefits from last year related to the “Barbie” movie, and faces rising shipping costs amid the conflict in the Red Sea. They also said “the prospect of a Trump presidency (and accompanying tariffs), have been more recent (and incremental) drags, in our opinion.”
They said Mattel’s shares “may lack a near-term catalyst,” but were upbeat on the company’s entertainment lineup in the years ahead.
That includes “Moana 2” in November, followed by “Jurassic World 4” in June 2025, “Toy Story 5” in June 2026 and “Frozen 3,” estimated in November 2026, “along with movies based on owned IP including ‘Masters of the Universe’ (summer ’26) and ‘Hot Wheels’ (TBD), and the possibility for a ‘Barbie’ sequel,” they said.
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