Mattel Inc (NASDAQ: MAT) stock rose over 6.7% in the pre-market session of October 23rd, 2020 (Source: Google finance) after the company posted better than expected results for the third quarter of FY 20 and forecast more growth in the holiday season, as retailers rushed to restock their shelves of Barbie dolls and other toys in high demand from stuck-at-home kids. The lack of new movie franchises tied to competing toy brands may give a boost to Mattel, which relies on well-known products such as Barbie, Uno and Pictionary. The company’s doll sales rose 22% compared with a year earlier, as families looked for cheap ways to entertain kids during lockdowns. Worldwide Gross Sales for Infant, Toddler, and Preschool were down 6%to $404.1 million, mainly due to declines in Fisher-Price Friends and Fisher-Price and Thomas & Friends. Worldwide Gross Sales for Vehicles were up 66% to $369.4 million, mainly due to growth in Hot Wheels. Worldwide Gross Sales for Action Figures, Building Sets, Games, and Other rose 14% to $354.5 million, mainly due to the growth in Star Wars: The Child plush, card games, including UNO, Jurassic World, and Pictionary, partially offset by declines in Toy Story 4, post its movie launch year.
Moreover, American Girl direct to consumer sales doubled and almost fully compensated for the reduction in the retail business with growth in new customer activations, average order value and conversion rates. For the third quarter, direct to consumer represented more than 50% of sales. Hot Wheels rose 9%, with broad-based growth across segments including Monster Trucks and Super Mario Kart. Hot Wheels also benefited from improved impulse purchases as retail stores reopened and foot traffic increased. Hot Wheels POS was up double digits, due to the significant demand for this brand. Hot Wheels gained share in the third quarter in the US and remains the number one vehicles brand per NPD.
In addition, the company has recently announced a new film project based on Thomas & Friends. The film will be co-produced and directed by Marc Forster, which is the acclaimed filmmaker and Director of James Bond Quantum of Solace, Christopher Robin and Finding Neverland among others.
MAT in the third quarter of FY 20 has reported the adjusted earnings per share of 95 cents, beating the analysts’ estimates for the adjusted earnings per share of 39 cents. The company had reported the adjusted revenue growth of 10 percent to $1.63 billion in the third quarter of FY 20, beating the analysts’ estimates for revenue of $1.46 billion, according to IBES data from Refinitiv.