“We expect headwinds that may impact consumer spending and affect consumer demand this year,” said CEO Ynon Kreiz.
Mattel (MAT) – Get Free Report shares plunged lower Thursday after the Barbie Doll maker posted weaker-than-expected holiday quarter earnings and cautioned that fading consumer demand would last for much of the current financial year even as the toy industry shows ‘resilience’ to “macroeconomic challenges”.
Mattel said adjusted earnings for the three months ending in December slumped 66% from last year to 18 cents per share, well shy of Street forecasts, as quarterly sales fell 22% to $1.4 billion. Mattel said infant and pre-school toys were hit the hardest, thanks in part to inventory reductions at various retailers.
Looking into the current year, Mattel said it sees adjusted earnings in the region of $1.10 to $1.20 per share, with net sales largely flat to 2022 levels.
“While the fourth quarter was below our expectations, the full year results tell a more complete story in the context of our multiyear growth trajectory,” CEO Ynon Kreiz told investors on a conference call late Wednesday. “Notably, holiday results were heavily skewed by the volatility and timing of retail inventory movement throughout the year, not by the underlying marketplace performance of our business.”
“Given the continuing macro challenges, we do expect headwinds that may impact consumer spending and affect consumer demand,” he added. “So we do expect the industry overall to be flat to slightly up in 2023, which is off to a good start in terms of consumer demand for our product. It’s still early, obviously, but we are seeing a good start.”
Mattel shares were marked 9% lower in pre-market trading to indicate an opening bell price of $18.65 each, a move that would extend the stock’s six-month decline to around 18.5%.
Late last month, rival toymaker Hasbro (HAS) – Get Free Report said fourth quarter sales would likely fall by around 17% from last year’s levels, to $1.68 billion, pulling adjusted earnings into a weaker-than-expected range of between $1.29 and $1.31 per share following a disappointing holiday season.
The Monopoly and Play-Dough maker also said it will cut around 1,000 jobs, with announcements coming over the next few weeks, including the departure of COO Eric Nyman, ahead of its formal fourth quarter earnings on February 16.
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