Toy boom is not a Covid ‘one-off’, says Mattel

Surging demand for toys lifted Mattel to its biggest holiday sales in four years, as shoppers scooped up Barbie dolls and Hot Wheels cars to entertain kids stuck at home because of the pandemic.

Ynon Kreiz, chief executive, said the results highlighted strength across the group's toy catalogue as Mattel has gained market share, aided by both the pandemic-driven jump in sales and a multiyear turnround effort.

“We regard it as our best performance in years, but it’s not a one-off,” he said of the company’s fourth-quarter performance.

With children spending more time at home, the coronavirus pandemic has fuelled a resurgence in demand for toys and games, which have faced stiff competition from video games and streaming content in the battle for kids’ attention.

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The US toy market had $32.6 billion in sales in 2020, a 16.7 per cent increase from the previous year, according to NPD Group figures published by the Toy Association, a trade group. That followed a 3.5 per cent decrease in 2019.

“There is no question that the pandemic drove demand with kids staying at home. With the lockdowns, parents spent money on their children,” Mr Kreiz said. “Some of the demand was driven by Covid, but the year was projected to grow even before Covid.”

Mattel's 2020 included its two biggest increases in quarterly sales in almost a decade. Its rival Hasbro, which sells Star Wars action figures and Monopoly board games, also reported stronger sales in the three months to the end of December.

Mattel’s Barbie and American Girl dolls were popular items in the Christmas period, as were Hot Wheels, Uno cards, Star Wars plush toys and Mega building sets.

Its doll sales grew at the quickest pace, rising 13 per cent year on year to $709 million. Global sales of toys for young children, including Fisher-Price and Thomas & Friends, were also up, although their growth of 6 per cent trailed other categories.

Overall, fourth-quarter net sales jumped 10 per cent to $1.63 billion, with demand in North America accelerating faster than the company’s international business. Analysts had projected a smaller gain to $1.58 billion.

Online sales grew by more than 50 per cent in the year and now account for more than a third of global retail sales, Mr Kreiz said, reflecting a trend across the retail industry as consumers shied away from shopping in bricks-and-mortar stores.

Net income rose to $130.5 million, a year after the company reported only a slight profit.

The company also announced a new cost-cutting program, aimed at saving about $250 million in costs by 2023. Mattel said it expects to spend between $100 million to $125 million to implement it. – Copyright The Financial Times Limited 2021 / Reuters