By Granth Vanaik
(Reuters) – Mattel Inc reported a bigger-than-expected loss for the first quarter on Wednesday as the toymaker grappled with higher costs and retailers cutting back on orders.
Consumer companies have been struggling with supply chain issues as well as higher labor and raw material costs, which led Mattel to raise prices for toys and dolls over the past year.
Despite that gross margins fell 640 basis points to 40% in the quarter, also because excess stock forced retailers to cut orders for the toymaker’s products as they look to keep their inventory levels tight.
“Our first-quarter results were negatively impacted by elevated retail inventory and also due to the comparison to the year-ago quarter, which benefited from retailers building inventory earlier in the season,” said Chief Executive Ynon Kreiz in an interview with Reuters.
“Retailers are working through this inventory and expect that to be corrected by the end of the first half.”
Price increases have also discouraged consumers from spending more on its products, leading to a 21% drop in net sales for Mattel to $815 million after adjusting for currency fluctuations. Analysts expected it to generate $740.7 million.
Worldwide gross billings for Barbie, which represents amounts invoiced to customers, fell 41%, while Hot Wheels’ billings rose only 1%.
Excluding one-time items, Mattel lost 24 cents per share in the quarter ended March 31 compared to 8 cents adjusted profit a year ago, while analysts estimated a 19 cents loss, according to Refinitiv data.
The company, however, stuck to its full-year net sales and adjusted profit forecasts and said it expects inflation to moderate in 2023.
(Reporting by Granth Vanaik in Bengaluru; Editing by Arun Koyyur)
