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Barbie’s world just got a little less sparkly. Third-quarter results from parent company Mattel show the toy giant is feeling the pinch as it heads into the holiday season amid rising inventories and declining sales.
For toy companies, the quarter just preceding the all-important holiday season functions as a preview — with Walmart and Target revealing their holiday sales estimates through their ordering patterns. If the giant retailers expect a big Christmas, they place large third-quarter orders. If they’re feeling more cautious, well, it shows up as a lag in Mattel’s results like we’re seeing now.
Sales down, margins down, inventory up
The House of Barbie and Hot Wheels on Tuesday reported net sales of $1.74 billion, down 6% from a year ago. Adjusted gross margins fell almost 3 full percentage points, to 50.2%, or just above Mattel’s 50%+ target. Adjusted operating income slid by more than $100 million, and earnings per share dropped 22%.
There were bright spots, with Hot Wheels sales up 6% and action figures up 9%, thanks to franchises like Minecraft and Masters of the Universe. But dolls — Mattel’s biggest category — fell 12%, led by a double-digit decline in Barbie. Fisher-Price and preschool lines also plunged 26%.
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