Aggressive cost-cutting measures and record earnings for its Hot Wheels and Barbie brands have helped lift Mattel to better-than-expected Q4 2018 earnings.
The toyco reported operating income of US$107 million for the quarter, an improvement of US$358 million over the same period in 2017. It marks the biggest year-over-year Q4 improvement for Mattel in a decade.
While quarterly revenue dropped 5.4% to US$1.5 billion, the decline still beat analysts’ estimates of US$1.4 billion. For North America, Q4 net sales fell 6% to US$708 million versus a year ago, driven primarily by Toys “R” Us liquidations. International net sales, meanwhile, rose 2% to US$658 million, largely due to a slowdown in Mattel’s China business.
Despite a worldwide gross sales decline of 6% to US$1.2 billion for Mattel Power Brands in Q4, Barbie’s worldwide gross sales climbed 12% to US$390 million, while sales of Hot Wheels increased 9% to US$286 million. The gains were partially offset by sales for Fisher-Price and Thomas & Friends, which dropped 17% to US$352 million. American Girl decreased 27% to US$165 million.
For 2018, Barbie sales reached US$1.09 billion, marking a five-year high, while sales of Hot Wheels totaled US$834 million, the brand’s highest on record.
As for Mattel’s Toy Box brands, including its Owned Brands and Partner Brands, gross sales fell 21% to US$519 million, primarily due to lower sales of MEGA and CARS products, and partially offset by initial sales of Jurassic World products.
The toyco’s improved Q4 results come after the company announced a US$650-million cost-cutting plan in 2017, which led to last summer’s news that Mattel would eliminate 2,200 jobs, representing 22% of its global non-manufacturing workforce.
To keep up with rivals like Hasbro, the toyco recently launched a new feature film business unit led by producer Robbie Brenner. Mattel films is currently developing a live-action Barbie feature starring Margot Robbie, as well as a first-ever live-action movie based on the Hot Wheels franchise. Both projects are being produced in partnership with Warner Bros. Pictures.
More recently, Mattel appointed former Disney Channels Worldwide original programming EVP Adam Bonnett to lead TV development and production.