Mattel (MAT) Q4 earnings 2022

barbie maker Mattel released fourth-quarter results after the market closed on Wednesday, which came in well below Wall Street’s expectations after holiday selling failed to offset slowing consumer demand.

CFO Anthony DiSilvestro attributed the poor performance to fewer orders from retailers and higher inventory management costs.

The company hoped that “main holiday season” will be a potential boost to sales as demand slowed down amid inflation.

“Fourth quarter results came in below our expectations as the macro environment turned out to be more challenging than we expected,” Chief Executive Inon Kraitz said on Wednesday. income announcement.

Mattel shares fell about 10% after the close of trading on Wednesday.

Here’s how Mattel fared in the fourth quarter compared to what Wall Street expected, based on average analyst estimates compiled by Refinitiv:

• Adjusted earnings per share: 18 cents vs. expected 29 cents
• Income: $1.40 billion vs. expected $1.68 billion

For the three months ended December 31, the company reported net income of $16.1 million, or 5 cents per share, compared to $225.8 million, or 64 cents per share, a year earlier.

The toy giant was confident early last year that it would continue to gain momentum due to the pandemic, driven by parents buying toys and trying to keep kids entertained at home. The company said it expected customers to be minimally concerned about higher prices as inflation and foreign exchange barriers pushed up production costs.

But buyers appear to have felt the pressure as the company’s toys like Barbies and Hot Wheels are becoming more expensive and the company’s fourth-quarter sales are down 22% year-on-year.

Mattel’s North American segment shrank 26% during this period due to declining sales of children’s brands such as Fisher-Price, dolls and action figures. International sales also fell 18%.

The company fell short of its own full-year profit expectations, reporting 2022 earnings per share of $1.11. In October, the company cut its forecast to an expected range of $1.32 to $1.42.

Entering fiscal year 2023, Mattel is projecting full-year adjusted earnings per share of $1.10 to $1.20. He expects sales to decline further in the first half of the year as retailers continue to cut inventory levels.

The inflationary environment has put pressure on toy manufacturers across the industry. Rival toy manufacturer Hasbro cut 15% of its workforce in January and warned of weak performance over the holidays. Hasbro started the fiscal year noticeably more conservatively than Mattel as macroeconomic pressures intensified and the company adjusted to a change in management.

As consumer demand declines from the peak levels of the pandemic, Mattel is working to diversify its revenue streams by leveraging the intellectual property of its toy brands for non-manufacturing businesses.

The release of the film “Barbie” with Margot Robbie and Ryan Gosling in the lead roles is scheduled for July 21. Mattel announced last April that JJ Abrams’ production company Bad Robot would produce a Hot Wheels movie in collaboration with Warner Bros. Discovery. The company is working on a dozen other feature films for brands like Polly Pocket, Barney and more.

The project is part of Kreiz’s broader strategy to use a “built-in fan base” to transform Mattel from a toy manufacturer into a multi-segment home of toy franchises.