Mattel, Inc (NASDAQ:MAT) shares were down 10% to $18.02 in premarket despite the toy maker reporting third-quarter earnings ahead of forecasts and raising full-year profit guidance, with Barbie products boosted by the successful movie.
Earnings per share came in at $1.08, up from $0.82 this time last year, and ahead of the Street’s expectation of $0.87.
Revenue grew 9% year over year to $1.92 billion and topped estimates of $1.83 billion.
Barbie accounted for around $125 million of "boosted" revenue, though more generally Mattel described a "tough" year for the toy industry as a whole which it said was expected to be down "mid-single digits" for the year.
Nevertheless, Mattel told investors it expects a “strong” holiday trading period and increased its full-year profit outlook.
Mattel chief executive Ynon Kreiz described the success of the Barbie movie as a global cultural phenomenon.
“Mattel’s strong third quarter performance reflects the successful execution of our strategy to grow Mattel’s IP-driven toy business and expand our entertainment offering,” Kreiz said.
The company raised its full-year profit guidance, forecasting adjusted EPS in the range of $1.15 to $1.25, up from its previous guidance range of $1.10 to $1.20.
It continues to expect comparable net sales in constant currency to fiscal 2022’s $5.44 billion.
“We are very well positioned competitively and expect to gain market share in the fourth quarter and full year,” CEO Kreiz said.
Investors, however, were left disappointed by Mattel’s weak full-year revenue outlook.
For the quarter, gross billings for dolls grew 27% to $884 million, driven by growth in Barbie, Disney Princess, Disney Frozen and Monster High, and gross billings for vehicles rose 18% to $518 million on growth in Hot Wheels.
On the other hand, gross billings for infant, toddler and preschool decreased by 2% to $361 million due to declines in Thomas and Friends and gross billings for action figures, building sets, games and other fell 19% primarily attributed to declines in Action Figures related to 2022 theatrical releases.