"Mattel Boosts Profits Despite Lowered Sales Forecast"

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"Mattel Boosts Profits Despite Lowered Sales Forecast"

Toy manufacturer Mattel Inc. (NASDAQ:MAT) exceeded profit expectations through effective cost management, despite revising its annual sales outlook downward amid a challenging holiday season. Mattel's shares rose over 3% in after-hours trading on Wednesday.

Known for its Barbie and Hot Wheels brands, the company raised its annual cost savings target to about $75 million, having already achieved its initial $60 million goal in the first nine months of the year. These savings are part of a strategy to achieve $200 million in cost reduction by 2026, which includes optimizing the supply chain and phasing out or licensing less successful products.

Mattel also revised its gross profit margin forecast for the year, now anticipating it to reach 50%, up from a previously projected range of 48.5% to 49%. This revision follows a 210 basis point increase in the company’s adjusted gross margin in the third quarter, bringing it to 53.1%.

For 2024, the company softened its net sales expectations to be flat or slightly lower compared to the $5.44 billion reported last year, a change from an earlier projection of flat sales in constant currency. This revision considers a shortened holiday shopping period with five fewer days between Thanksgiving and Christmas, prompting retailers like Walmart (NYSE:WMT) and Target to offer early discounts on toys.

Mattel's net sales fell 4% to $1.84 billion in the third quarter, marking the third consecutive quarter of decline. This drop was slightly sharper than the 3.2% decline analysts anticipated, according to LSEG data, with global gross billings for the Dolls segment falling 14%.

Despite the initial excitement boosting demand for Barbie-related products following last year’s "Barbie" film, which has waned, Mattel maintains its full-year adjusted earnings per share forecast in the range of $1.35 to $1.45. The company reported adjusted earnings of $1.14 per share for the quarter ending September 30, surpassing analysts’ expectations of 95 cents per share.