What Does the New Barbie Movie Mean for Toy Maker Mattel’s Business?

According to Rotten Tomatoes, Barbie, directed by Greta Gerwig, grossed an estimated $93 million in its second weekend. The picture currently has the sixth-best second weekend of all time and had already earned $351.4 million after just 10 days.

A collaborative effort between Warner Bros and Mattel, the creator of Barbie, the movie has helped Mattel’s stock price rise by almost a third from its low point in March, as the corporation attempts to cash in on its popularity. The toy company is already preparing a sequel and expanding its Hollywood franchises to include other brands like Hot Wheels and Barney.

Although there are some who feel that the excitement generated by the movie will only result in a temporary increase in sales that will begin to decline in the final few months of the year, Mattel believes that this marks the beginning of a promising new chapter for the company.

Mattel, a company established in 1959, has previously seen the production of animated versions such as Barbie In The Nutcracker, Barbie As Rapunzel, and Barbie Of Swan Lake. However, the most recent live-action production of Barbie is the most prominent rendition to hit cinemas and is hoped to be a huge boost to the company, as some other recent films have proven to be for the companies that created their title characters.

Nintendo Reports Massive Growth Following Super Mario Bros. Movie

One such company, Nintendo, released its earnings report this week and has had a blockbuster movie to thank for its vastly healthier-looking balance sheet.

Since its premiere in April, Universal Studios “The Super Mario Bros. Movie,” based on Nintendo’s most popular characters, has earned over $1 billion worldwide. It’s been hugely beneficial to a variety of Nintendo’s commercial divisions, and it produced a halo effect that attracted customers to the products offered by the Japanese gaming giant.

The company also launched “The Legend of Zelda: Tears of the Kingdom” in May, and it quickly became the best-selling game in the series’ history thanks to the hype generated by the movie.

According to the company’s statement released on the 3rd of August, the first quarter of the fiscal year saw a 50.0% rise in net sales, to 461.3 billion yen, an 82.4% increase in operating profit to 185.4 billion yen, and a 52.2% increase in ordinary profit to 253.7 billion yen.

Sales of mobile and IP-related products increased overall by 190.1% year over year to 31.8 billion yen, helped by a rise in royalties and sales of visual assets from the movie.

If the Barbie Movie does as expected and reaches near the $1 billion dollar mark for sales, it’s probably fair to assume a similar story may unfold for Mattel’s next quarter earnings, even despite recently falling sales.

Mattel’s Most Recent Quarterly Earnings Were a Miss, but the Future Looks Bright

Ynon Kreiz, Chairman and CEO of Mattel suggested in their most recent earnings report on July 26th, that the Barbie movie serves as a demonstration of the cultural impact of the company’s intellectual property, their capacity to draw in and work with top creative talent, and the skills of the company’s franchise management. He also pointed to the future potential of Mattel Films and the considerable advancements made in their plan to maximize the value of their intellectual property.

Despite the positive demand for the film, Mattel’s previous quarter results weren’t exceptional. As with other toy companies, Mattel has seen a drop in sales since the pandemic drove parents and shops to stock up on toys for children who were forced to stay inside. As a result of high inflation and interest rates, toy stores are still trying to sell off their surplus of stock despite the current drop in consumer spending by reducing prices.

During the second quarter, there was a decrease of 12% in Net Sales, or 13% in constant currency, compared to the previous year’s second quarter. The recorded operating income amounted to $63 million, reflecting a decline of $62 million. Similarly, the adjusted operating income was at $75 million, indicating a reduction of $47 million.

The company’s EPS was $0.08, down from $0.18 in the prior-year period, while EPS was $0.10, up from $0.18 in the prior-year period after adjusting for non-recurring items.

Mattel executives discussed the film’s influence on sales and the company’s ability to partner with other brands during its earnings call, describing the phenomenon as a “halo effect” for Barbie that would have long-lasting repercussions.

After a successful month of July sales, CEO Kreiz suggested that the brand’s line of movie-themed toys and goods had sold out “very fast” and that more would be coming soon. Mattel announced the release of a soundtrack and the formation of over 165 consumer product collaborations in conjunction with the film, with thousands of displays being placed in shops across the world…

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