(Reuters) – Mattel lowered its full-year sales forecast on Wednesday as the Barbie parent heads into the crucial holiday shopping season against the backdrop of muted demand for toys.
The company now expects 2024 net sales to be in the range of flat to down slightly from last year’s $5.44 billion, compared with its prior estimate of flat on a constant currency basis.
A shorter holiday season, with five fewer days between Thanksgiving and Christmas, has prompted retailers including Walmart and Target to roll out early deals on toys with low price points.
Net sales fell for the third straight quarter in the July-September period, declining 4% to $1.84 billion. Analysts on average had expected a 3.2% decline to $1.86 billion, according to data compiled by LSEG.
Worldwide gross billings for its Dolls category slumped 14%.
The “Barbie” movie release last year had boosted demand for Barbie-themed toys and other products, but the buzz has since eased.
Mattel has turned to aggressive cost controls to ride out the sluggish demand. It has set a target of $200 million in savings by 2026 through efforts such as streamlining its supply chain and exiting or out-licensing underperforming products.
The Hot Wheels parent raised its annual adjusted gross margin expectation to 50% from a prior range of 48.5% to 49%. Adjusted gross margin increased 210 basis points to 53.1% in the third quarter.
Mattel, which is focusing on intellectual property partnerships for its popular brands such as Disney Princess and Despicable Me, maintained its annual forecast for adjusted earnings in the range of $1.35 to $1.45 per share.
On an adjusted basis, it earned $1.14 per share for the three months ended Sept. 30.
Analysts had expected a profit of 95 cents per share.
(Reporting by Savyata Mishra in Bengaluru; Editing by Sriraj Kalluvila)