Barbie maker Mattel swings to loss as retailers cut orders, costs rise
MATTEL posted a bigger-than-expected loss for the first quarter on Wednesday (Apr 26) as it grappled with higher costs and retailers cutting back on orders.
Consumer companies have been struggling with supply chain issues as well as higher labour and raw material costs, which led Mattel to raise prices for toys and dolls over the past year.
Despite that gross margins fell 640 basis points to 40 per cent in the quarter, also because excess stock forced retailers to cut orders for Mattel’s products as they try to keep their inventory levels tight.
That led to a 21 per cent drop in net sales for Mattel to US$815 million after adjusting for currency fluctuations. Analysts expected it to generate US$740.7 million, according to Refinitiv data.
“Our first-quarter results were negatively impacted by elevated retail inventory and also due to the comparison to the year-ago quarter, which benefited from retailers building inventory earlier in the season,” said chief executive Ynon Kreiz.
“Retailers are working through this inventory and expect that to be corrected by the end of the first half.”
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Big three retailers like Amazon, Target and Walmart have also to some extent cut back on some toy orders this year, said James Zahn, editor-in-chief of “The Toy Book”. “Smaller retailers did not have the inventory jam up that the big boxes have.”
Worldwide gross billings for Barbie, which represents amounts invoiced to customers, fell 41 per cent, while Hot Wheels’ billings rose only 1 per cent.
Excluding one-time items, Mattel lost 24 US cents per share in the quarter that ended Mar 31 compared to 8 US cents adjusted profit a year ago, while analysts estimated a 19 US cents loss.
The company, however, stuck to its full-year net sales and adjusted profit forecasts and said it expects inflation to moderate in 2023. REUTERS
Share with us your feedback on BT's products and services
