Mattel’s Q4 Report in Comparison to Expectations
The COVID-19 pandemic has significant economic disruption throughout 2020 as unemployment spiked, forcing many families to cut out unnecessary retail spending. As a result, toy companies such as Mattel struggled to maintain strong sales as business dipped in the first half of the year. After a strong holiday season, Mattel was put back on track going into 2021.
In fact, the toy company reported Q4 net sales topping $1.63 billion, easily topping analyst expectations, which hovered much closer to $1.58 billion. The net sales represented a 10% boost to the sector, pushing the business upward as families spent more on products rather than recreational family activities like vacations or theme parks, as those still remained closed or limited. Furthermore, the business reported an impressive earnings of $0.40 per share, blowing out Wall Street expectations, which had the toy company only pulling in earnings of $0.24 per share.
Mattel can attribute the boost in sales and earnings per share to the increase of gross billings in North America and internationally rising by 13% and 8%, respectively. In North America, Hot Wheels and certain licensed action figures were responsible for a decrease. In contrast, dolls, infant, toddler, preschool action figures, and buildings made up for the decrease in those same regions. Internationally, infant, toddler, and preschool items were responsible for the worst sales numbers, though strong sales in Hot Wheels, Barbies, and games such as Uno and MEGA were the biggest gainers.
Mattel’s Stock Gains and Future Outlooks
Following the release of the Q4 earnings report, the toy business saw its stock increase significantly. After a low on Wednesday of $17.80 a share at around 10:45 a.m., the company rallied to well over $18 per share, where it currently stands. The business also has strong expectations for 2021, with forecasts of a net sales increase somewhere in the mid-single digits, beating out increases in 2020.
The company also announced a major cost-cutting program aiming to save over $250 million by 2023. This initiative will cost the business around $100 million to fully undertake.
When commenting on the strong Q4 report, CEO and chairman of the business Ynon Kreiz said, “This was a banner quarter for the company with our best performance in years. In the midst of a pandemic and very challenging market conditions, our results exceeded expectations, with another major upswing in topline and a significant increase in profitability, as we gained global market share and continued to transform Mattel into an IP-driven, high performing toy company.”
Mattel’s Q4 growth outpaced rival toy business, Hasbro, who only posted a 3.6% rise in holiday quarter revenues.
About the Author
Tom Price is a writer focusing on entertainment and sports features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.