Mattel company logo is pictured at the entrance of the Montoi plant in the municipality of Escobedo.
Reuters - Mattel Inc forecasts for 2023 earnings less than estimates on Wednesday, joining Hasbro Inc in feeling the brunt of the high inflation that has hit demand for its action figures and Barbie dolls.
Shares of the company were down about 10% in extended trading.
Mattel said demand dropped suddenly and sharply in October and November, leading to more profit-margin denting clearance sales to get rid of excess inventory, while the toy industry has historically been more resilient to economic downturns than other discretionary sectors.
Kreiz said that he still believes that the industry will grow this year.
Hasbro has projected its holiday-quarter results below Wall Street expectations in January, and said it would cut 15% of its global workforce this year to return to a competitive position.
Mattel is taking similar measures to save $50 million in costs this year, on top of its previous target of $250 million, according to Kreiz.
According to Refinitiv data, Mattel projected adjusted profit between $1.10 and $1.20 per share for the full year, which is less than analysts' expectations of $1.66.
The company's gross margin fell by 630 basis points to 43% in the fourth quarter ended December 31. Mattel earned 18 cents per share, below the estimates of 29 cents, excluding one-time items.
In the quarter, gross billings for Barbie, Mattel's biggest brand, fell 33%, while those of Hot Wheels rose 8%.
Net sales fell 22% to $1.40 billion, missing estimates of about $1.68 billion.
Mattel expects to resume share repurchases in 2023, with around $200 million remaining under the company's current program.