Mattel earnings race ahead as Hot Wheels dodges inflation drag

July 21 (Reuters) – Mother and father continued to purchase Mattel Inc’s (MAT.O) motion figures and Sizzling Wheels automobiles for his or her children though the toys acquired pricier, serving to the corporate trump quarterly outcomes estimates on Thursday.

Rival Hasbro Inc (HAS.O) had additionally notched a strong second quarter, as demand for toys has thus far withstood the decades-high inflation that has pressured Individuals to avoid wasting their {dollars} for necessities like meals and gasoline. learn extra

However surging prices of uncooked supplies, freight and labor are beginning to catch as much as Mattel, pulling its adjusted margins to 45% from final 12 months’s 47.5%.

In response, Mattel plans to proceed elevating costs and Chief Govt Officer Ynon Kreiz mentioned he was assured that toy gross sales would maintain up even in a possible financial downturn, echoing feedback from his counterpart at Hasbro.

Mattel’s internet gross sales jumped 20% to $1.24 billion within the second quarter, surpassing analysts’ estimates of $1.10 billion, in accordance with Refinitiv IBES information.

The general gross billings for Sizzling Wheels toys rose 26% within the quarter, whereas the unit that makes motion figures recorded a 44% leap, pushed by demand for toys primarily based on characters from the “Lightyear” and “Jurassic World” films.

Nevertheless, Chief Finance Officer Anthony DiSilvestro in an earnings name mentioned the corporate is seeing some softness in higher-priced gadgets such because the Barbie Dreamhouse.

Shares of the California-based toymaker slipped about 1% in prolonged commerce, bruising this week’s 12% achieve.

“We imagine peak margins are behind MAT and are a bit apprehensive about stock ranges up 44% YoY,” mentioned CFRA Analysis fairness analyst Zachary Warring, however added that the corporate is in a significantly better place than earlier than the pandemic.

Kreiz informed Reuters the 44% improve in Mattel’s inventories was wanted to satisfy an anticipated improve in demand within the second half of the 12 months.

Excluding gadgets, the corporate earned 18 cents per share, beating estimates of 6 cents.

Reporting by Uday Sampath Kumar and Ananya Mariam Rajesh in Bengaluru; Enhancing by Devika Syamnath

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