Mattel was optimistic about its prospects in the all-important holiday quarter, but cut its full-year earnings guidance as it weighed in a challenging macroeconomic environment would on earnings.
The company, known for Barbie dolls and Hot Wheels toy cars, said it now expected adjusted earnings to fall in a range of $1.32 to $1.42 a share, down from a $1.42 to $1.48 previously, and said its gross adjusted margin would be about 47 per cent, at the lower end of earlier guidance.
“We do see an overall macroeconomic environment that is more challenging and that could impact consumer spending,” chief executive Ynon Kreiz told the Financial Times.
Rival toymaker Hasbro reported last week that consumers have become more price sensitive to higher prices, which has weakened demand and weighed on sales. Although Mattel has also raised prices this year for its products, Kreiz said so far the company has not seen a “meaningful impact on consumer demand related to our toys.”
Mattel reported net sales were flat from the previous year at $1.75bn in the three months that ended September 30, missing analysts’ forecasts for revenue of $1.78bn.
Net sales in North America declined 3 per cent, but this was offset by a 5 per cent rise in sales for its international segment. Kreiz said retailers in the US accelerated purchases of inventory in prior quarters, which has helped leave year-to-date North American revenue up 10 per cent from a year ago.
The company expects top and bottom line growth in 2023, but acknowledged in its earnings release “higher volatility, including inflation” in the challenging economic environment “may impact consumer demand.”
Mattel’s reported earnings fell 64 per cent from the previous year to in the third quarter or 80 cents per share, comfortably topping analysts’ estimates for 73 cents.