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Mattel’s franchise-expanding efforts appear to be paying off. The toymaker reported a 9% YoY revenue increase in Q3, beating analysts’ expectations. The halo effect of the Barbie movie is one reason why: Barbie sales jumped 16% in the quarter, while doll sales as a whole rose 27% year over year.
Mattel has adopted a “long-term franchise management strategy” for Barbie and other brands, CEO Ynon Kreiz said during an earnings call, one aimed at transcending the toy aisle. This year, Barbie tie-ins included TV shows, games, and a host of brand collaborations. Mattel expected an estimated $125 million in box office and toy sales related to the Barbie movie, the Wall Street Journal reported.
Mattel has also leaned into Hot Wheels, launching Hot Wheels: Ultimate Challenge, a car makeover show, on NBC this year. Hot Wheels sales grew 22% YoY, CNBC reported, and the vehicles category was up 18%, offsetting a 19% decline in the “action figures, building sets, games, and other” toys category.
“This is not just about Barbie,” Kreiz said. “The portfolio as a whole is very strong.”
Mattel revised its guidance upward modestly, increasing its adjusted gross margin from around 47% to 47%–48% and its EPS from $1.10–$1.20 to $1.15–1.25. However, it held its sales guidance steady, striking a cautious note as it enters the critical holiday season.
“Our sales guidance reflects higher-than-anticipated benefits associated with the Barbie movie offset by the impact of overall toy industry declines,” CFO Anthony DiSilvestro said during the earnings call. The toy industry has entered a slump after experiencing 22% growth between 2019 and 2022, and Mattel expects the industry to be down in the mid-single digits for the year.
“We are operating in a challenging macroeconomic environment with higher volatility that may impact consumer demand,” DiSilvestro said.
Movie mania: Warner Bros. is producing a live-action Hot Wheels movie directed by lens flare king J.J. Abrams, Kreiz said during the earnings call. Other Mattel movies are in the works, according to the Wall Street Journal, including ones based on Polly Pocket, the Magic 8-Ball, and (shudder) Barney the dinosaur.