Mattel is stocking up in anticipation of higher demand for Jurassic World action figures and Hot Wheels cars this holiday season, citing a 20 per cent increase in second-quarter revenues as evidence that inflation has not deterred parents from spending on toys.
The California-based company behind Barbie dolls and Thomas & Friends trains reported its adjusted operating income jumped 82 per cent to $121mn in the three months to June, despite higher costs for materials, ocean shipping and wages.
Gross billings for action figures rose by almost 50 per cent before currency effects, driven by the Jurassic World and Lightyear films, but sales of its American Girl dolls fell by 19 per cent. Ynon Kreiz, chief executive said Mattel was “seeing some softness” in demand for higher-priced toys.
While net sales of $1.24bn were up 24 per cent before currency effects, Mattel increased inventories by 43 per cent, or about $360mn. Kreiz said the higher stocks were appropriate for the demand it had seen from consumers, and from retailers that have been placing orders earlier than usual to avoid a repeat of last year’s supply chain delays.
“The big picture is that parents will always prioritise spending money on their children. Retailers see the industry as a strategy priority for them in terms of experiential shopping, engagement, foot traffic and so forth,” he said in an interview.
Mattel had observed some improvement in inflation in commodities and logistics, Kreiz said, and its own supply chains were operating well.
The earnings came a day after Mattel’s Matchbox brand struck a deal with Elon Musk’s SpaceX to produce a range of rocket-themed toys and collectibles. “This is really about Mattel extending our portfolio . . . and being able to bring new partners into the toy aisle,” Kreiz said.