At this point, everyone is seeing Barbie pink, whether you like it or not. And that’s a vision toymaker Mattel has ambitious plans to sustain.
Last week, the highly anticipated “Barbie” film broke an opening weekend record for the year, pulling in $155 million in the U.S. and $337 million globally.
“The Barbie movie is a showcase for the cultural resonance of our IP [intellectual property], our ability to attract and collaborate with top creative talent, and the capabilities of our franchise management organization. This also speaks to the potential of Mattel Films and the significant progress of our strategy to capture the full value of our IP,” said Ynon Kreiz, chairman and CEO of Mattel, during the company’s second-quarter earnings call on Wednesday (July 26).
Global sales of Barbie to retailers (excluding adjustments) fell 6% due to promotional changes made to coincide with the release of the movie. However, Mattel has reported an improvement in sales during July. The company anticipates that the movie will create a halo effect for the Barbie brand.
“We significantly increased free cash flow and continued to gain market share,” Kreiz said. “Importantly, this moment will be remembered as a key milestone in our company’s history with the release of the Barbie movie.”
In anticipation of the movie’s release, Mattel launched an extensive product marketing campaign, with over 100 brands prominently featuring the pink everywhere. However, it may take some time before the full benefits of these tie-ins are realized, as consumer spending on toys remains cautious.
Read more: Seeing Pink: Barbie Collabs Run Rampant as Movie Debuts
Kreiz also emphasized a significant transformation in Mattel’s “strategy and DNA” as a result of the immense success of the Warner Bros. film. The company now recognizes that their product buyers are not just mere consumers; they are devoted fans. This has paved the way for Mattel to explore opportunities for engaging with their fan base and creating value.
Read also: The Barbie Phenomenon and Its Impact on Brands and Consumers
As the movie continues to gain momentum, attracting a strong international audience and even drawing in more male viewers, Kreiz noted that the toymaker has ambitious plans to extend the impact of “Barbie” beyond the film.
In response to analysts’ inquiries regarding the impact of Hollywood labor actions on their entertainment projects, Kreiz acknowledged that the strikes have indeed led to delays in some of their developments.
Nevertheless, he reassured that progress had been made prior to the strikes, and the company is optimistic about resuming momentum once the situation stabilizes. While not providing specific details about the affected projects, Mattel has been working on various ventures, including a Barney movie, a Polly Pocket movie, a Hot Wheels movie, and an American Girl movie.
During the second quarter, which ended on June 30, the company recorded a profit of $27.2 million, compared to $66.4 million in the same period last year.
In the face of economic uncertainty, sales witnessed a 12% decrease, totaling $1.09 billion in the latest quarter, in contrast to the $1.23 billion in the previous year. The decline in sales was primarily attributed to retailers scaling back their toy orders.
Anthony DiSilvestro, CFO of Mattel, pointed out that the company has successfully overcome the “retail inventory correction” phase.
During the second quarter, the North America segment declined 18% in both net sales and gross billings — sales made to retailers before any adjustments are taken into account.
Worldwide gross billings for the doll category reached $441 million, an increase of 10% year over year, or 9% in constant currency. This growth was primarily propelled by performances of Disney Princess, Disney Frozen and Monster High. However, the growth was partially offset by a decline in Barbie sales.
Despite achieving a surprise profit in the quarter, Mattel reaffirmed its financial outlook. The company maintains its full-year projection, expecting it to remain flat year over year.
Mattel’s earnings report comes in the wake of the fashion retailer Gap’s announcement regarding the appointment of Richard Dickson, a Mattel veteran, as its president and CEO. Dickson will start at Gap on Aug. 22.
Serving as the president and chief operating officer at Mattel, Dickson has been instrumental in rejuvenating the brands Barbie, Hot Wheels and Fisher-Price, effectively steering the company back to a growth trajectory. Gap, in a press release Wednesday, highlighted Dickson’s successful contributions to Mattel. He has also been a member of Gap’s board of directors since November.
“Richard has invaluable expertise in areas critical to the work Gap Inc. is doing to strengthen the company for the long term,” Gap Lead Independent Director Mayo A. Shattuck III said in a statement. “And we are thrilled to have his visionary leadership as the company redefines the future potential of Gap Inc. and its renowned American fashion brands.”
According to a press release, Dickson will be resigning from his position at Mattel, effective Aug. 3.
Read more: Gap Appoints Mattel Veteran Richard Dickson as President and CEO
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