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Mattel’s chief executive hailed the success of the Barbie movie as proof of its ability to find new revenue streams for its brands, but cautioned that soft toy industry demand would drag on sales in the coming months.
Ynon Kreiz said the film’s record-setting $155mn box office takings last weekend were “a showcase” for his strategy of repositioning Mattel from a toymaker to a manager of brand-driven media franchises.
Earnings for the three months to June 30 showed little early impact from the heavily marketed film, which opened on July 21, however. Worldwide gross billings for Barbie dolls were down 6 per cent at $283mn in a quarter when group sales fell 13 per cent at constant currency rates, to $1.09bn.
Mattel’s earnings, of $27mn or 8 cents a share, exceeded Wall Street forecasts of a 2 cent loss but the company kept its full-year outlook unchanged.
“The industry as a whole has been softer than we expected,” Kreiz said in an interview, but he added retailers’ inventory levels were becoming more favourable and Mattel expected to take market share from rivals over the rest of the year.
Shares in Mattel have risen 17 per cent in the past month, strongly outperforming rival Hasbro.
Mattel has not disclosed what share of the box office takings it will receive, but Kreiz said toys tied to the film and other Barbie-branded products from scores of retail, music and consumer product partnerships were selling “really well”.
“We expect Barbie [sales] to grow for the second half of the year and be positive for the full year,” he said.
Mattel’s strategy was “never about one movie”, he added. The audience reaction to Barbie had broadened the brand’s appeal and set it up for further films, television shows and other opportunities, he said. Mattel has plans for films and shows of brands ranging from Hot Wheels cars to the Uno card game.
“This is another example of how the movie becomes the centre of gravity that generates more activity and more activation in relation to the Barbie brand,” Kreiz said.
The earnings came as a top Mattel executive behind the growth of the Barbie franchise left to become chief executive of Gap, ending the US apparel retailer’s year-long search for someone to lead its turnaround efforts.
Richard Dickson, who rose to the role of chief operating officer in 22 years at Mattel, will relieve Bob Martin, Gap’s interim chief executive since Sonia Syngal left last July. Martin will remain Gap’s chair.
Gap, which has been struggling with excess inventory and dwindling consumer demand in a high-inflation environment, is hoping Dickson’s experience at Mattel could help turn its fortunes around.
The retailer, which also owns the Banana Republic and Athleta brands, described Dickson as the “lead architect” in “reinvigorating” Mattel’s brands.
Gap had sought to capture some of the hype surrounding the Barbie movie with a Gap x Barbie apparel collaboration, followed by plans for Hot Wheels-branded clothing later this year.
“There’s never a good time to lose a key executive but if there’s ever a time this is the best time,” Kreiz said, adding that Dickson had nurtured a strong team to succeed him.
Gap shares closed 7.7 per cent higher on Wednesday at a three-month high. The group’s stock fell 36 per cent last year as a slowdown in discretionary spending weighed on sales and profit.
Despite the positive reaction from investors on Wednesday, the market broadly remains wary of consumer stocks that are particularly exposed to any potential economic downturn.