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Can Mattel (MAT) Replicate '20 Performance in 2021?
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Although 2020 has been a tough one for global stock market, Mattel, Inc. (MAT - Free Report) has emerged as an aberrant. Case in point, the stock has gained 29.3% year to date, compared with the S&P 500’s rally of 17.8%. Appreciation in share price can be primarily attributed to sales growth in North America, robust Barbie brand growth and strong product line-up.
Although the company’s total sales declined due to the pandemic, it surpassed the company’s expectation. However, sales growth in North America Barbie and games is a major take away from third-quarter 2020. In North America, gross sales increased 13% year over year. This can primarily be attributed to increase in sales in Dolls, Action Figures, Building Sets, Games, and Other (comprising Star Wars: The Child plush, card games, including UNO, Jurassic World, and Pictionary, partially offset by Toy Story 4), and Vehicles (including Hot Wheels and CARS). The improvement was marginally offset by decline in Infant, Toddler, and Preschool (comprising Fisher-Price Friends and Fisher-Price and Thomas & Friends).
Moreover, Barbie brand continues to impress investor with solid performance. In the third quarter, the Barbie brand witnessed an improvement of 29% on reported basis and 30% on constant-currency basis. Barbie point of sales increased 50%. Per NPD, Barbie gained market share in the dolls category in the third quarter and was the number one toy property in the United States, Europe and Latin America. The company witnessed strong Hot Wheels sales in the third quarter after witnessing dismal performance in second-quarter 2020. In third-quarter 2020, gross sales at the Hot Wheels brand rose 7% on a reported basis and 9% on constant-currency basis.
Meanwhile, the company has been undertaking efforts on the digital front and focusing on better execution of marketing and promotional initiatives to bring back its flagship brands, Barbie and Fisher-Price, to their former positions. In fact, the company has formed a brand development framework to unlock the scale and profitability of its brands and modernize them for the digital world. Notably, the company is making significant progress to transform Mattel into an IP-driven high-performing toy company.
Concerns
The company reported robust results in third-quarter 2020 despite the pandemic. However, management announced that coronavirus pandemic and other macroeconomic uncertainties might negatively impact performance. By the end of the third quarter, nearly 2% of all retail outlets that sell the company’s products, which represent nearly 1% of its revenue base, were closed due to the pandemic.
Mattel has considerable international presence and is therefore highly vulnerable to fluctuations in exchange rates. Foreign exchange translation might hurt results in the days ahead.
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Can Mattel (MAT) Replicate '20 Performance in 2021?
Although 2020 has been a tough one for global stock market, Mattel, Inc. (MAT - Free Report) has emerged as an aberrant. Case in point, the stock has gained 29.3% year to date, compared with the S&P 500’s rally of 17.8%. Appreciation in share price can be primarily attributed to sales growth in North America, robust Barbie brand growth and strong product line-up.
Although the company’s total sales declined due to the pandemic, it surpassed the company’s expectation. However, sales growth in North America Barbie and games is a major take away from third-quarter 2020. In North America, gross sales increased 13% year over year. This can primarily be attributed to increase in sales in Dolls, Action Figures, Building Sets, Games, and Other (comprising Star Wars: The Child plush, card games, including UNO, Jurassic World, and Pictionary, partially offset by Toy Story 4), and Vehicles (including Hot Wheels and CARS). The improvement was marginally offset by decline in Infant, Toddler, and Preschool (comprising Fisher-Price Friends and Fisher-Price and Thomas & Friends).
Moreover, Barbie brand continues to impress investor with solid performance. In the third quarter, the Barbie brand witnessed an improvement of 29% on reported basis and 30% on constant-currency basis. Barbie point of sales increased 50%. Per NPD, Barbie gained market share in the dolls category in the third quarter and was the number one toy property in the United States, Europe and Latin America. The company witnessed strong Hot Wheels sales in the third quarter after witnessing dismal performance in second-quarter 2020. In third-quarter 2020, gross sales at the Hot Wheels brand rose 7% on a reported basis and 9% on constant-currency basis.
Meanwhile, the company has been undertaking efforts on the digital front and focusing on better execution of marketing and promotional initiatives to bring back its flagship brands, Barbie and Fisher-Price, to their former positions. In fact, the company has formed a brand development framework to unlock the scale and profitability of its brands and modernize them for the digital world. Notably, the company is making significant progress to transform Mattel into an IP-driven high-performing toy company.
Concerns
The company reported robust results in third-quarter 2020 despite the pandemic. However, management announced that coronavirus pandemic and other macroeconomic uncertainties might negatively impact performance. By the end of the third quarter, nearly 2% of all retail outlets that sell the company’s products, which represent nearly 1% of its revenue base, were closed due to the pandemic.
Mattel has considerable international presence and is therefore highly vulnerable to fluctuations in exchange rates. Foreign exchange translation might hurt results in the days ahead.
The company, which shares space with Hasbro, Inc. (HAS - Free Report) , JAKKS Pacific, Inc. (JAKK - Free Report) and Glu Mobile Inc. , has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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