While recent box-office receipts suggest major toy brands are unstoppable now, big toymakers are already tempering expectations for sales this holiday season.
Hasbro predicted a revenue decline of 13-15% “driven by softer toy outlook in consumer products” in its earnings report (pdf) yesterday (Oct. 27). A day prior, Mattel warned that it is “operating in a challenging macro-economic environment with higher volatility, including inflation, that may impact consumer demand.”
Both Mattel and Hasbro had some bright spots in 2023, thanks to cinematic successes: On the back of the summer’s billion-dollar blockbuster, Barbie, Mattel saw revived interest in—and sales—of the iconic doll. The total impact from the company’s direct movie participation, movie-related toy sales, and consumer products is expected to generate more than $125 million in sales. For Hasbro, the new Transformers movie propelled the brand. It was “up 30% year over year and, during the movie window, was up over 90%,” CEO Chris Cocks said on the earnings call.
Hasbro’s Cocks more pessimisticly said the firm has a “cautious outlook” for the holiday season whereas Mattel leadership’s was more optimistic about a “strong” end of the year. But both agreed these breakout product lines won’t be enough to light up Christmas. Consumers are tightening pursestrings amid a persisting cost-of-living crisis, and toys remain low on the list of priorities.
The market felt the nerves: Mattel’s stock price was down 8%, and Hasbro’s, 12%, when markets closed yesterday (Oct. 27).
Charted: Mattel stock’s Barbie gains have been wiped out
Quotable: Banking on the Barbie phenomenon long-term
“The Barbie movie, Mattel’s first major theatrical release, became a global cultural phenomenon, breaking numerous box office records and becoming the highest-grossing film of 2023. The movie was a showcase for the cultural relevance of our IP, our ability to attract and collaborate with top creative talent, and our demand creation capabilities at a global scale. The movie has broadened Barbie’s fan base, which will be an important contributor for the brand as part of our long-term franchise management strategy. It also speaks to the potential of Mattel films and the significant progress of our strategy to capture the full value of our IP
—Ynon Kreiz, chairperson and CEO of Mattel, on the Oct. 25 earnings call
One more thing: Stronger together?
The largest American toy companies, clocking $11 billion in revenue between the two, have decided to join forces to tap a larger audience. In April, Mattel and Hasbro signed multi-year licensing agreements to collaborate on co-branded toys and games.
“For years the street has been trying to get these companies to combine. Other than historically, these types of mergers don’t benefit anyone except lawyers and bankers. Merging companies takes away the creativity that comes with the need to compete,” international business professor Gene Detroyer wrote in an online discussion about the collaboration on RetailWire. “It strikes me that this handshake will only spur creativity. It gives twice as many hearts and brains the chance to apply creativity to these valuable and fun properties.”