Mattel is back in the spotlight thanks to the star-studded blockbuster hit "Barbie." The El Segundo, Calif.-based toymaker beat estimates for its quarterly report late Wednesday. Mattel stock eased Thursday after initially surging in early trade. Shares jumped nearly 8% in July leading up to the movie release.
The "Barbie" movie, based on Mattel's iconic doll brand, already smashed North American box office records with its $162 million opening weekend, making its July 21 debut the biggest of the year. The release of director Greta Gerwig's "Barbie" alongside Christopher Nolan's "Oppenheimer" sparked an online craze for the unique double feature that fans dubbed "Barbenheimer." The two films raked in a combined $244.5 million domestically, marking the fourth-biggest box office weekend in history, according to reports.
Mattel hasn't disclosed if it will see direct revenue from the film's box office success through it's Warner Bros. Discovery partnerships, Barron's reported. But the company will likely see higher profit margins from brand licensing deals and an uptick in Barbie toy and merchandise sales.
Stifel analyst Drew Crum estimated the film could gross $450 million to $550 million, which could lift Mattel's profit by 10 cents this year, according to a Tuesday research note reported by MarketWatch. Stifel estimates the movie could bring in $100 million in revenue for Mattel, including $75 million from toy sales, $12.5 million from brand licensing and $11 million in film revenue.
But the Barbie party hasn't started yet as those benefits likely won't show up until later in the year. Analysts don't expect Q2 results to have much "Kenergy."
Mattel Earnings
Mattel's adjusted earnings tumbled 44% to 10 cents per share as revenue fell 12% to $1.09 billion for the quarter. Still, the results were just "Kenough" to beat Wall Street estimates.
Analysts polled by FactSet expected Mattel to report a loss of 3 cents per share for Q2 compared to earnings of 18 cents per share last year. Revenue was seen tumbling 18.7% to $1 billion.
Barbie sales fell year over year for the fourth straight quarter, sliding 6% to $282.7 million. Fisher-Price and American Girl brand sales also declined for the fourth consecutive period. Hot Wheels sales sales increased for the third quarter in a row, rising 10% to $315.2 million.
Mattel's Q2 results were in-line with company expectations, CEO Ynon Kreiz said in the earnings release. But more importantly, the quarter marked Mattel's first major theatrical film with the release of the "Barbie" movie.
"The Barbie movie is a showcase for the cultural resonance of our IP," Kreiz said. "This also speaks to the potential of Mattel Films and the significant progress of our strategy to capture the full value of our IP."
Mattel maintained its full year guidance following the results. The company expects its adjusted margin to improve to 47% from 45.9% in 2022. Mattel sees adjusted earnings falling as much as 12% to range from $1.10 to $1.20 per share. The toymaker guided free cash flow around $400 million, compared to $256 million in 2022.
FactSet analysts expect full year adjusted earnings decline 7% to $1.16 per share.
Toy Turbulence
But Mattel isn't the only toymaker expected to struggle this quarter as rivals Hasbro and Funko report on August 3.
Analysts expect Hasbro earnings to halve to 56 cents per share in its early report next Thursday, while revenue falls 17% to $1.11 billion. Hasbro's "Dungeons & Dragons: Honor Among Thieves" film that released on March 29 has grossed $208.2 million worldwide.
Struggling pop culture collectible company Funko is expected to report a loss of 41 cents per share during its morning report as an inventory glut weighs on results. Analysts forecast revenue down 20% to $250 million. On July 13, Funko executive Brian Mariotti agreed to take a six-month leave of absence and was removed from his role as CEO by the board of directors. The board appointed Michael Lunsford to serve as interim CEO while Funko searches for a full-time replacement. Mariotti and Lunsford will both remain as directors of the company.
Mattel Stock
MAT shares dipped about 04% Thursday after surging more than 5% in the morning following results. Mattel stock jumped 18% over the past three months and is up 19% so far this year.
Mattel stock is trading above all its moving averages.
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