By Savyata Mishra
(Reuters) -Mattel beat Wall Street’s quarterly profit expectations as its Barbie parent kept a tight rein on costs but cut its annual sales forecasts ahead of the crucial holiday shopping season amid muted toy demand .
Shares rose more than 4% in extended trading on Wednesday. Rival Hasbro (NASDAQ:), which plans to report results before markets open Thursday, rose 2%.
Mattel (NASDAQ:) expects to achieve cost savings of approximately $75 million this year, after surpassing a previous target of $60 million within the first nine months.
“Mattel is hitting its stride at a challenging time for the toy industry,” said Emarketer analyst Zak Stambor.
Hot Wheels’ parent company has turned to tighter cost controls to meet sluggish demand, with sales falling for the third straight quarter this year. The company has set a goal of achieving $200 million in savings by 2026, including streamlining its supply chain and shortening product lines.
It now expects 2024 net sales to be flat to slightly down from last year’s $5.44 billion, compared to its previous estimate of flat at constant exchange rates.
“Aggressive retail pricing and discounts can impact sales leading up to the holiday season and I believe the company is being cautious about that,” said James Zahn, editor-in-chief of The Toy Book magazine.
Meanwhile, Mattel raised its annual adjusted gross margin guidance to 50% from 48.5%.
Net sales fell 4% to $1.84 billion, missing expectations of $1.86 billion, according to data compiled by LSEG.
Global gross billings for the Dolls category fell 14%, mainly due to weaker Barbie sales, while gains from last year’s film release “Barbie” slowed.
Mattel, which focuses on intellectual property partnerships for its popular brands, earned $1.14 per share on an adjusted basis, beating estimates of 95 cents.
