‘Barbie’ storms the box office but won’t boost Mattel just yet

BARBIE, the film based on the iconic Mattel Inc doll, had the biggest opening of the year last weekend, but don’t expect the picture to have a major impact on the company’s near-term financial results. 

Directed by Greta Gerwig and starring Margot Robbie, Barbie has already sold US$356.3 million in theater tickets globally. Mattel shares climbed 1.8 per cent on the news on Monday (Jul 24), capping a run of Barbie buzz that’s lifted the El Segundo, California-based company’s market valuation by more than a third since a recent low in March. 

While the performance of Barbie is positive news for theaters and Mattel’s wider ambitions in entertainment, analysts expect the toymaker’s sales to tumble about 19 per cent to US$1 billion in the second quarter, according to estimates compiled by Bloomberg. The company is expected to post a loss of three US cents a share when it releases results after the market closes on Wednesday.

Mattel, like other toymakers, is fighting a slump in sales after the pandemic prompted parents and retailers to stock up on toys for kids stuck at home. With consumers now pulling back, retailers are still working through all of that extra inventory and have been slashing prices on toys.

The world seems awash in Barbie pink at the moment. Mattel has struck 100 brand partnerships with the likes of Gap Inc and flooring company Ruggable. But Mattel gets only a fraction of the revenue from sales of licensed products, so the company still relies on sales of its own toys to drive results.

Stifel Financial Corp analyst Drew Crum, who has a “buy” rating on the shares, figures the Barbie film should generate about US$100 million in revenue for Mattel this year. That includes US$75 million in toy sales, US$13 million from product licensing and US$11 million from the film. Warner Bros Discovery Inc financed and released the picture in a deal with the toymaker. 

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Two Barbie-related toys were among Amazon.com Inc’s top 100 sellers this week, including an US$80 airplane set and a US$33 brushable unicorn.

The grownup nature of the film – it’s rated PG-13 – may limit toy sales, but the picture and all of the associated marketing and media attention will have a “halo effect” on the Barbie brand, noted Goldman Sachs analyst Stephen Laszczyk. He updated his Barbie revenue estimate last week and now sees sales for the brand rising 1.7 per cent to US$1.52 billion this year, with all of the growth coming in the second half.

Mattel plans other film adaptations of its toys, including Hot Wheels, scheduled for 2025, and is likely learning from the Barbie experience, he said. BLOOMBERG