Mattel bets on cost savings to drive 2024 profit as toy demand dulls
Reuters
Published Feb 07, 2024 04:05PM ET
Updated Feb 07, 2024 06:41PM ET
(Reuters) -Mattel forecast 2024 adjusted profit above market expectations and announced a $1 billion share buyback program as the Barbie parent benefits from its cost-saving measures.
Inventory trimming, as well as lower input costs, helped drive another quarter of gross margin gains for the company, even as softer toy demand in the key holiday quarter led to a sales and profit miss, and a tepid 2024 sales forecast.
Gross margins in the quarter ended Dec. 31, 2023 were up 580 basis points, improving on a 280 basis points rise in the third-quarter.
"We expect 2024 to also be soft but better than 2023 as (consumer spending) trends will continue to improve," CEO Ynon Kreiz told Reuters.
Mattel (NASDAQ:MAT) forecast 2024 net sales in-line with $5.44 billion reported in 2023 — shy of market expectations of a rise of 1.4%.
It announced a new cost savings program focused on streamlining its supply chain, and forecast full-year adjusted earnings per share between $1.35 and $1.45, largely above the LSEG estimate of $1.37.
"The immense growth (the toy industry) experienced during 2020, 2021, and the first portion of 2022 should have never been considered sustainable," said James Zahn, senior editor at The Toy Book.
Earlier this month, activist investor Barington Capital pushed the company to a possible sale of its Fisher-Price and American Girl brands, saying they were detracting from the success at Mattel's other segments, and hurting shareholder value.
Mattel said on Wednesday that American Girl will no longer be an operating segment from the current quarter, and integrated into its North America unit.
The company has struggled to stem the fall in demand for the brand, with gross billings or total sales to retailers falling 5% in the fourth quarter for the segment.
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Written By: Reuters
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