There were fewer Mattel toys under the tree in Q4 2022 as the toymaker took a hit from overstocked retailers and underspending consumers, causing sales to plummet 22%.
It was widely reported that Mattel shares were trading down roughly 10% on the news.
During the company’s fourth-quarter 2022 earnings call on Wednesday (Feb. 8), Mattel Chairman and CEO Ynon Kreiz pointed to lower retail replenishment and consumer spending pullbacks in certain products like Barbie and American Girl and weakness in toddler products.
“Our fourth quarter results were below our expectations as the macroeconomic environment was more challenging than anticipated,” Kreiz said. “We did see POS growth in the quarter, including double-digit growth in December, but it came later than expected and was not enough to offset lower-than-anticipated consumer demand in October and November.”
He said this led to more discounts and promotions by retailers “and a more cautious approach to their inventory replenishment as they manage their existing stock,” adding that “quarterly results were heavily skewed by the volatility and timing of retail inventory movement throughout the year, not by the underlying performance of our business.”
While Mattel remains the top dolls brand, according to NPD as referenced on the call, the core Barbie line “was down following two years of double-digit growth, including the highest year on record,” he said.
As it relates to Mattel’s so-called power brands including Barbie, Fisher-Price, and Thomas & Friends, sales of Thomas & Friends products “went down significantly as retailers reduced replenishment orders,” Kreiz said, but added that “Hot Wheels was up strongly.”
In Mattel’s fourth quarter, dolls, infant, toddler, and preschool (ITPS) in challenger categories “in aggregate were down significantly as retailers reduced replenishment orders,” Kreiz noted, adding that sales of toy vehicles “was up strongly. [Sales] significantly outpaced gross billings and was positive for dolls, vehicles, and challenger categories, and flat for ITPS.”
Hot Wheels, Matchbox, and vehicles as a category were up in one of the only bright spots.
Read: Mattel CEO Says Toy Biz Is Defensive but Expects Late Shopping Surge
Kreiz and CFO Anthony DiSilvestro spoke of plans in motion to continue a strategy of leveraging Mattel’s intellectual property (IP) in areas including filmed entertainment and theme parks.
“We continued to strengthen our relationships with the major entertainment companies with additions or extensions of key licenses, including Disney Princess and Disney Frozen, Pokémon, and Universal’s Trolls. We have grown Mattel Creations, our collector DTC business, which is capitalizing on the strength of our franchises and built-in fan base, increasing traffic by over 40% and volume by over 85%,” Kreiz said.
See also: Mattel Reports $1.2B in Sales, Surpassing Q1 Record
He added that Mattel partnered with Skydance Media in 2022 to develop a Matchbox live-action film, and “announced that J.J. Abrams’s ‘Bad Robot’ will produce the Hot Wheels movie with Warner Bros., and ‘The Barbie Movie’ completed principal photography and is in post-production towards its global theatrical release this summer.”
In addition to 11 series and specials, including Mattel’s first live-action movie musical “Monster High” premiering on Nickelodeon and Paramount+, Kreiz told investors that “The Mattel Adventure Park is under construction and is expected to open in the fourth quarter of 2023.”
In gaming, he pointed to the Mattel163 mobile gaming joint venture with NetEase, saying revenues for the gaming partnership “grew to over $175 million.”
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