Barbie as the hit of the season
In the first quarter of 2023, the company fell into a loss that had exceeded market expectations. It was caused by an increase in product prices and a subsequent reduction in orders from the retail sector due to high inventories. Nevertheless, the popularity of the Barbie movie seems to be working in favor of its parent company Mattel. Indeed, the Barbie brand is Mattel's most profitable brand and the success of the film will boost it even further. Not to mention that the current boom has led to an expansion of cooperation and trademark agreements for the brand. A great example is the shoe manufacturer Aldo, which has launched Barbie-themed shoes. After the release of the film, it is as if the Barbie-branded products, which are everywhere, were ripped open.
Positive news and good results
The company's optimistic business outlook is supported by good sales results in the last quarter, driven not only by the above mentioned factors but also by good results for the American Girl and Hot Wheels brands. In the last quarter, Mattel recorded a remarkable 36% increase in net sales, which reached USD 1.02 billion.* This growth significantly reduced the company's net loss to USD 5.5 million from USD 111.1 million in the same quarter a year ago. Such financial improvement is a strong signal that the company is on track to get its books back into the green.
A forecast with potential
Mattel's management is convinced of the company's prospects and has adjusted its full-year forecast for net sales growth at constant exchange rates from the previous 6-8% to the current impressive 12-14%. In addition, the company estimates its earnings before interest, taxes, depreciation and amortization (EBITDA) for this year at $875 million to $900 million, what represents a rise up from the previous range of $800 million to $825 million. Moreover, it even expects adjusted EBITDA to surpass the $1 billion mark in 2022, what shows huge confidence in its future growth potential [1].
To sum up, we can conclude that Mattel's recent sharp revenue growth and improving earnings outlook make it an attractive prospect for investors looking for investment opportunities in the toy industry.* With its iconic brands, financial performance and commitment to innovation, the company appears well-positioned to continue its growth in the coming years. [2] As with any investment, however, it is important to do thorough research and consider your risk tolerance before making any decisions.
Chart: Mattel's share value over five years*(Resource:Tradingview.com)
Olívia Lacenová, Chief Analyst at Wonderinterest Trading Ltd.
* Past results are no guarantee of future results.
[1,2] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.
