Mattel Sales Declines Slow as Toys Make a Cautious Comeback

After years of consumers cutting back on nonessential retail purchases, Mattel is now starting to feel optimistic about the future of toys sales.

On Tuesday (July 23), the toy and entertainment giant, owner of iconic brands including Barbie, Hot Wheels, Fisher-Price, American Girl and many others, reported its second quarter 2024 financial results. On a call with analysts, Ynon Kreiz, the company’s chairman and CEO, related improvements in the toys sector.

“The toy industry performed better than anticipated in the first half and was comparable to the prior year period. We expect the toy industry to decline modestly in 2024, which is an improvement from our outlook at the start of the year,” Kreiz said.

“Beyond 2024, we believe trends will further improve and that the industry will return to growth and continue to grow over the long term.”

The company reported a marginal 1% year-over-year decline in net sales, far better than the 12% drop reported for Q2 of 2023. The 6% drop in worldwide gross billings for dolls, driven primarily by declines in Barbie and Disney Princess lines, suggests a shift in consumer preferences within the toy segment. In contrast, the 2% rise in gross billings for vehicles, led by Hot Wheels, underscores a sustained interest in classic and collectible items.

“Toys are an important part of consumers’ lives, and retailers see the category as a strategic lever,” Kreiz said. “For Mattel, we expect our toy business to grow in the second half and look forward to a good holiday season.”

Social Consciousness

Also on Tuesday, Mattel announced two new Barbie dolls, appealing to young parents’ demand for more socially conscious merchants. These included the “first-ever Blind Barbie Fashionista doll” in partnership with American Foundation for the Blind as well as the first Black Barbie doll with Down syndrome in collaboration with the National Down Syndrome Society.

“Inclusion and empathy are at the heart of better play,” the doll brand’s social media post stated. “… With Barbie Fashionista dolls, we strive to ensure all kids feel represented and can play out the world they experience around them.”

This move comes as young parents seek brands that align with their social values. “Generation Zillennial,” a PYMNTS Intelligence special report, surveyed more than 3,000 U.S. consumers in April to understand the spending, financial and lifestyle preferences of zillennials, the bridge generation spanning older Gen Z and younger millennial consumers. The study found that 24% of consumers overall care whether a merchant’s social values align with theirs, and that share rises considerably to 33% for zillennials.

Parents are a lucrative market. PYMNTS Intelligence’s new study “The Last Transaction: Family Spending Habits Reveal Merchant Opportunities in Retail and Travel” found that married parents were 36% likelier to complete a retail purchase in the last month than single consumers without children at home.

Plus, parents typically have higher household incomes, with 62% of those who are married with children at home reporting annual incomes of $100,000 or more versus 59% of those who are married without children. Similarly, 37% of those who are single with children reported the same, versus 24% of those who are single without children.

How Mattel Is Doing

Amid the sales decline, the company achieved improvements in gross margin and profitability, signaling strategic efficiencies and shifts in product demand.

Key figures from the quarter reveal a complex landscape. Operating income increased by $20 million to $83 million, and net income surged by $30 million to $57 million. These gains were achieved despite a 3% decline in North American net sales.

Regionally, the 2% increase in international net sales, despite a 1% decline in gross billings, points to a mixed but generally resilient global market. Growth in Fisher-Price products within the infant, toddler, and preschool category partially offset declines in other segments, reflecting a prioritization of educational and developmental toys by parents.

“We are in a strong financial position to execute our strategy, to grow our IP-driven toy business and expand our entertainment offering,” Kreiz said.