By Deborah Mary Sophia and Uday Sampath Kumar
(Reuters) – Mattel Inc forecast full-year profit above estimates on Wednesday, with the company confident robust demand for its Barbie dolls and other toys will help it weather rampant supply chain disruptions, sending its shares up about 6% in extended trading.
Demand for toys has surged to a record high over the last year thanks to homebound parents looking to keep their children entertained indoors during the pandemic, helping toymakers such as Mattel raise prices to counter surging costs without fear of much consumer pushback.
Mattel’s holiday-quarter revenue jumped 10% to about $1.80 billion, beating analysts’ estimates of $1.66 billion, despite factory closures and supply disruptions caused by the spread of the Omicron coronavirus variant.
Even as supply chain bottlenecks and surging raw material costs show no signs of easing, Mattel Chief Executive Ynon Kreiz told Reuters he was confident the company had enough options to navigate the issues, including potentially raising prices further.
“We are not necessarily expecting supply chain disruptions to go away, but we do expect to be able to navigate further disruption if it comes,” he said.
Earlier this week, rival Hasbro Inc warned of a hit to its profit margins this year, due to surging supply costs.
Mattel expects adjusted 2022 profit of $1.42 to $1.48 per share, above estimates of $1.39 per share, according to Refinitiv IBES. It forecast net sales to rise between 8% and 10% on a constant currency basis.
The toymaker also lifted its 2023 net sales growth forecast to high single digits from a previous outlook of mid-single-digit growth.
An added lift to sales in 2023 will likely come from Mattel winning back the lucrative rights to make dolls based on Disney Princesses, with Kreiz saying he expects revenue from the toy line to grow past current levels.
Hasbro, which has held the Disney Princess license since 2016, has on average generated about $250 million in revenue per year from the business.
(Reporting by Deborah Sophia and Uday Sampath Kumar in Bengaluru; Editing by Krishna Chandra Eluri)