Toymakers Mattel and Hasbro tumbled early Thursday, despite third-quarter results boosted by sales related to the "Barbie" movie and by the Baldur's Gate 3 video game. MAT stock and HAS stock retreated after pointing to possible holiday shopping season volatility.
Toy giant Mattel, the maker of popular brands like Barbie, Hot Wheels and American Girl Dolls, reported 31.7% earnings growth to $1.08 per share adjusted for Q3 results late Wednesday. Revenue rose 9.3% to $1.92 billion.
Analysts polled by FactSet expected earnings of 86 cents per share on $1.84 billion in sales.
"Our results benefited from the success of the 'Barbie' movie, which became a global cultural phenomenon, and marked a key milestone for Mattel," CEO Ynon Kreiz said in the release.
Barbie sales jumped 16% worldwide to $605.1 million, fueled by the July 21 release of the blockbuster movie. Hot Wheels sales leapt 22% globally to $454.8 million. Total worldwide gross billings rose 9% to $2.12 billion.
Mattel's gross margin improved to 51% from 48.3% last year, also bumped up by benefits from "Barbie."
Mattel updated its adjusted earnings outlook to range between $1.15 and $1.25 per share, up from the prior guidance of $1.10 to $1.20 per share. The company sees adjusted gross margin between 47% and 48%, up from 45.9% last year. Mattel maintained its free cash flow guidance around $400 million, compared to $256 million in 2022.
FactSet analysts expect full-year earnings of $1.22 per share on a 1% revenue increase to $5.49 billion.
Mattel CFO Anthony DiSilvestro noted the company expects a strong holiday season in the earnings call, but warned "we are operating in a challenging macroeconomic environment with higher volatility that may impact consumer demand."
Meanwhile, Mattel plans to build off its "Barbie" movie success and has more films based off its intellectual property in the works.
MAT Stock
MAT stock dropped 7.6% Thursday after diving 11.7% premarket following results. Shares gained 4.2% in 2023 through Thursday's close.
Hasbro Earnings
Rival Hasbro reported a 15.5% increase in adjusted earnings to $1.64 per share on a 10% revenue decline to $1.5 billion.
Analysts polled by FactSet expected earnings of $1.72 per share on $1.62 billion in sales.
Hasbro CEO Chris Cocks noted that its Wizards of The Coast and Digital Gaming segments delivered a "standout performance" thanks to strength in its Magic: The Gathering and Dungeons & Dragons brands. The release of Baldur's Gate 3 in August, the licensed Dungeons & Dragons video game developed by Larian Studios, also provided a major boost to sales.
Although overall revenue fell, the Wizards of The Coast and Digital Gaming segment revenue spiked 40% to $423.6 million. Baldur's Gate 3 and Monopoly Go!, the mobile version of the classic board game, drove $63 million of incremental revenue in Q3.
Consumer products sales, which include Play-Doh and Transformers, fell by 18% to $956.9 million. Entertainment segment revenue tumbled 42% to $122.9 million.
Hasbro updated its 2023 outlook to include the impact of broader declines in the toy category, which is largely impacting its consumer products segment.
Hasbro expects full-year revenue to fall between 13% and 15% with a decline in consumer products in the mid- to high-teens. It previously guided a 3% to 6% decline in revenue. Hasbro maintained its Wizards of the Coast guidance, expecting high single-digit sales growth.
Hasbro lowered its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) outlook to range between $900 million to $950 million, down from $1.17 billion last year.
Analysts forecast full-year revenue declines 4.8% to $5.5 billion with $1.1 billion in EBITDA. Fiscal 2023 earnings are seen falling 10.8% to $3.97 per share.
Hasbro Stock
HAS stock tumbled 11.7% Thursday. Shares are trading well below their 2023 high of 73.58 from early September. Hasbro stock unraveled 20.7% so far this year through Thursday's close.
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