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Mattel cuts profits as inflation hits Barbie, Fisher Price demand By Stocksak

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© Stocksak. FILEPHOTO: Hot Wheels, and Matchbox cars, brands of Mattel, Inc., are shown for sale in a Manhattan, New York City, U.S.A, November 30, 2021. REUTERS/Andrew Kelly

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By Ananya Mariam Rajesh and Uday Sampath Kumar

(Stocksak). -Mattel Inc reduced its annual profit forecast Tuesday and stated that it would increase promotions heading into the busy holiday period as red-hot inflation discourages Americans spending on Barbie dolls and Fisher Price toys.

California-based toymaker, Santa Cruz Toys, saw its shares fall by 4% in extended Trade after it also missed quarterly sales estimates. This is the first time since March 2020.

Toymakers are starting to feel the pinch when there have been repeated price increases in response to rising costs of raw material, freight, labor, and labor.

This month, Hasbro Inc (NASDAQ:) The company lowered its full-year revenue outlook, warning that demand was beginning to fall ahead of the festive period.

Mattel (NASDAQ 🙂 anticipates demand to increase during the critical holiday shopping season. However it said that it would still conduct more promotions to remain competitive.

Stocksak was informed by Ynon Kreiz Chief Executive, “We are in a challenging macroeconomic environment which equals volatility.”

Mattel’s 2022 adjusted profit forecast was reduced to between $1.32 to $1.42 per share, from $1.42 and $1.48 earlier. However, Mattel’s higher prices helped it post an adjusted Gross Margin of 48.3% in its third quarter, compared to last year’s 47.8%.

Kreiz stated in an earnings call that Mattel has not seen any “meaningful effect” on consumer demand for its toys due to the price increases it has made.

Zachary Warring, CFRA Research equity analyst, stated that parents tend to cut back on children’s spending when money is tight.

The unit that makes Hot Wheels saw an overall increase in gross billings of 12%. This partially offsets a 4% drop in North America due to declines in Barbie dolls sales and action figures.

According to Refinitiv data, IBES data shows that net sales decreased marginally to $1.76billion in the September 30 quarter. This was below analysts’ estimates at $1.78billion.

The company earned 82c/share, excluding items, exceeding estimates of 74c. It also reiterated its fullyear sales forecast.

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