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Mattel shares slid after the toymaker said it missed sales and earnings targets as retailers manoeuvred around US tariffs ahead of the holiday shopping season.
The company behind Barbie dolls and Hot Wheels cars reported a 6 per cent decline in net sales to $1.7bn in the third quarter, missing estimates. Net profit dropped by a quarter to $278mn.
California-based Mattel’s largest market is North America, and President Donald Trump’s tariffs have prompted importers to adjust how and when they bring products into the US. Mattel’s retail customers had shifted their order patterns, the company said.
“Given all the trade dynamics and macro uncertainty, what we saw is that retailers were pushing out decisions in terms of committing to buy product to a later period in the year,” Ynon Kreiz, Mattel chief executive, said in an interview.
More retailers shifted from picking up toys in the countries where they are made — such as China or Indonesia — to having Mattel handle imports and deliveries. The latter gave retailers more flexibility in the face of uncertainty over tariffs, Kreiz said.
Sales for so-called direct imports typically take place several months ahead of time and in larger quantities than when Mattel manages warehousing and imports itself, a service known as domestic shipping.
As a result, more shipments will come in at the end of the year, Kreiz said. Mattel maintained its guidance for net sales to rise by 1-3 per cent this year from last year’s $5.4bn. Shares of Mattel were 5.3 per cent lower in after-hours trading.
Mattel raised prices in July in part because of tariff costs, but Kreiz said US consumer demand was still growing. “Retailers are now accelerating domestic orders,” Kreiz said. “In fact we see significant acceleration to restock their inventories to meet the expected consumer demand, including for the holiday season.”
Worldwide gross billings for Mattel dolls fell by 11 per cent, primarily down to declines in billings for Barbie. Billings for infant, toddler and pre-school products fell by 25 per cent. But growth in Hot Wheels drove an 8 per cent increase in billings for toy cars.
Mattel and rival Hasbro announced earlier on Tuesday they had each reached licensing deals with Netflix to produce toys from KPop Demon Hunters, the streaming service’s most successful movie. The film helped Netflix increase revenue by close to a fifth in the third quarter, the streaming service said on Tuesday.
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