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‘Barbie’ Hits Record Box Office, but Mattel’s Earnings Struggle
Last weekend, the highly anticipated movie “Barbie,” based on the iconic doll by Mattel (MAT.US), topped the box office in North America, grossing a staggering $155 million. While this achievement is impressive, Wall Street analysts are skeptical about its impact on Mattel’s recent financial performance. The toymaker is expected to report its second-quarter earnings on July 26, and analysts are bracing for disappointing results.
According to industry experts, Mattel’s Q2 revenue is predicted to decline by approximately 19% year-on-year, amounting to $1 billion. Additionally, the company is expected to incur a loss per share of $0.03 during this period. Like many other toymakers, Mattel has been grappling with declining sales due to various economic factors.
The pandemic initially boosted toy sales as parents and retailers stocked up on entertainment options for children staying at home. However, as consumers now tighten their purse strings and retailers continue to manage excess inventory, prices on toys have been slashed. This dynamic has significantly impacted Mattel’s revenue and overall financial performance.
Although Mattel has formed partnerships with numerous well-known brands, such as Gap and Ruggable, the revenue generated from licensed products remains a relatively small fraction. As a result, the company heavily relies on its own toy sales to drive results.
While some analysts remain optimistic about Mattel’s outlook, others have expressed concerns about the adult nature of the movie “Barbie,” which has a PG-13 rating. This factor could potentially limit toy sales. However, analysts believe that the movie’s release and the associated influence and media attention will create a “halo effect” on the Barbie brand. It is projected that the Barbie brand’s revenue will increase by 1.7% this year, reaching $1.52 billion, with the majority of gains expected in the second half of the year.
Drew Crum, an analyst at Stifel, has a “buy” rating for Mattel and forecasts that the movie “Barbie” will generate around $100 million in revenue for the company this year. Of this amount, $75 million is expected to come from toy sales, $13 million from product licensing, and $11 million from movies.
Analyst Stephen Laszczyk from Goldman Sachs emphasizes that Mattel’s decision to adapt other popular toys into films could draw on the experience gained from the “Barbie” movie. Despite potential setbacks, he believes that the movie’s impact will extend beyond immediate toy sales and contribute to the long-term growth of the Barbie brand.
As Mattel prepares to release its second-quarter earnings, investors are anxiously awaiting the results. The success of the movie “Barbie” at the box office is undoubtedly a positive development, but it remains to be seen whether it will be enough to offset the company’s ongoing struggles amid a challenging industry landscape.
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