Mattel and Hasbro stocks crashed Thursday after the toymakers amplified concerns about sales during the crucial holiday season in their third-quarter earnings reports, sending Mattel shares to a not-so-dreamy milestone.
Mattel shares tanked 7.6% to below $19 despite beating analyst projections for quarterly sales and profits in its Wednesday earnings report, sending its shares to their lowest level since June 27, three weeks before the release of the smash success Barbie film featuring its signature doll.
The company showed “near-term cautiousness into the holiday season and the broader industry weakness” after it declined to raise its full-year revenue estimates despite the blowout Q3, according to UBS analyst Arpine Kocharyan, while Goldman Sachs analyst Stephen Laszczyk wrote he was “surprised by the stock’s outsized reaction” in after hours trading Wednesday.
Hasbro’s earnings report Thursday morning certainly did not help calm Mattel investors’ nerves, as Hasbro missed on the top and bottom line and downwardly revised its full-year revenue outlook from a 3% to 6% drop to 13% to 15% as management sounded the alarm on weak consumer demand in its earnings call.
Hasbro CEO Chris Cocks told investors his firm has a “cautious outlook” for the holiday season and the toy market in general as consumers grapple with an uncertain economy, contrasting Mattel leadership’s assertions in its earnings call that it expects a “strong” end of the year.
Shares of Hasbro subsequently tanked 12% to $48, its lowest closing price since March.
$605.1 million. That’s how much sales Mattel reported in its Barbie division during the three-month period ending September 30, a 16% annual increase.
Mattel previously said it experienced a $125 million boost to revenue tied to the Barbie film, which grossed more than $1 billion in box office sales globally. The toy industry has broadly been in a secular decline. Mattel shares are down about 60% over the last decade while Hasbro shares are up 3%, both well below the S&P 500’s roughly 140% jump in the period. Other retail-facing industries are also grappling with a holiday season largely expected to see a slowdown in discretionary consumer spending. Mattel and Hasbro are the two largest American toy companies, bringing in over $11 billion in revenue between the two firms last year.