Mattel Beats Estimates After Strong Holiday Barbie Sales
(Bloomberg) -- Mattel Inc. surpassed analysts’ estimates for the fourth quarter after parents snapped up Barbie dolls and Hot Wheels cars in a holiday toy-buying spree.
Leading the growth was doll sales, which surged 9% for all of 2020, the toymaker said Tuesday. Families have been looking for cheap ways to entertain bored children during lockdown, and in particular have been buying well-known brands, like Barbie and Uno cards.
Revenue rose 10% to $1.63 billion in the fourth quarter, Mattel said, topping analysts’ predictions of $1.58 billion. Adjusted profit increased to 40 cents a share, beating estimates of 24 cents, while margins improved further as Chief Executive Officer Ynon Kreiz focuses on cutting costs. The company expects strong toy demand to continue this year, with a “mid-single-digit percentage increase” in sales.
“This was a banner quarter for the company with our best performance in years,” Kreiz said in the statement. “The fourth quarter and full year demonstrated the resilience of the toy industry and the priority that parents place on quality toys, trusted brands and purposeful play.”
Mattel shares rose as much as 3.4% to $19.50 in late trading. They gained 29% last year.
The results were somewhat tempered by the lack of sales from licensed dolls and action figures, which are tied to new film releases and other forms of entertainment. Hollywood has mostly halted releases of major new films due to the coronavirus pandemic. Mattel, based in El Segundo, California, also saw a decline in some sales for toddler toys, from its Fisher-Price brand.
On Monday, shares of Mattel competitor Hasbro Inc. fell after the company said toy sales would continue to grow in 2021 but that operating cash flow won’t match the level seen in 2020. Hasbro on Tuesday announced staff cuts of 10% at its Entertainment One film and TV division.
Mattel expects adjusted 2021 earnings of $775 million to $800 million before interest, taxes, depreciation and amortization. Part of that will be spurred by new cost-reduction efforts that will save $250 million, including $75 million this year.
Still, Mattel says its adjusted gross margin will likely narrow to as low as 48.1% from 49.1% in 2020 due to higher costs.
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