Hasbro and Mattel have very different visions of the future
Customers shop for toys at a Target store on October 25, 2021 in Houston, Texas.
Brandon Bell | Getty Images
Hasbro and Mattel have very different ideas about the future of the toy industry.
While both of the country’s dominant toy companies reported strong revenue increases during the crucial holiday quarter and throughout 2021, only one of them expects continued robust growth.
“There is a sense of confidence and optimism behind Mattel,” said Gerrick Johnson, an analyst at BMO Capital Markets. “And a defensiveness from Hasbro.”
Mattel projects that consumers will accept new price increases and continue to buy at the same volume and velocity that they have been doing during the pandemic. However, much of that sales growth came on the backs of parents who turned to toys as a way to fill the hours spent at home during the pandemic and was helped by wallets that were padded by stimulus payments and child tax credits.
That has led to tempered optimism at Hasbro, which expects sales growth over the next two years to recede as spending on travel and leisure rebounds.
“That piece is something investors are wrestling with today,” said Stephanie Wissink, managing director at Jefferies. “Why is Hasbro’s view of the core toy business somewhat more conservative versus Mattel’s view of the toy business?”
Mattel’s optimism
Mattel’s optimism comes on the heels of a successful turnaround, one that led to the company’s Barbie brand posting its best full-year sales results in its more than 60-year history. Even the company’s previously beleaguered brands including American Girl, Fisher-Price and Thomas and Friends were revitalized.
Mattel’s revenue jumped 10% to around $1.80 billion in the fourth quarter, beating analysts’ estimates of $1.66 billion. Excluding items, it earned 53 cents per share, above estimates of 30 cents.
“Now the question is sustainability,” Wissink said. “Mattel is taking the approach of ‘Euromonitor told us 5%, and, therefore, we think the toy industry will grow faster for longer and that it is inelastic,’ ” she said.
That has led the company to update its expectations for the next two years. On Wednesday, during Mattel’s earnings call, it said it expects net sales in 2022 to grow 8% to 10%, and then expand at a high single-digit pace the following year. Previously, the company had predicted growth in the mid-single digits for both years.
Barbie dolls from the Fashionistas line of the U.S. toy manufacturer Mattel are on display at the company’s stand at the International Toy Fair, January 28, 2020 in Bavaria, Nuremberg. 2020.
Daniel Karmann | picture alliance | Getty Images
“2021 has been another year of strong financial performance,” said Anthony DiSilvestro, the company’s chief financial officer, on the call Wednesday. “We have made significant progress over the last four years, and as Ynon [Kreiz, Mattel’s CEO,] noted, our turnaround is now complete. Our guidance for 2022 and goals for 2023 reflect our momentum and confidence in our future…
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