Why Toymaker Mattel Is Upbeat About Holiday Sales During Economic Downturn

Toymaker Mattel Inc. (MAT) on Thursday reported strong sales growth for the third quarter and anticipated strength in revenue during the upcoming holiday season.

Chairman and CEO Ynon Kreiz said the third quarter was a good one for the maker of Barbie and other popular toys. Sales were boosted in part by a 50% increase in shopping online. Based on momentum so far, Kreiz said that with low inventories and an early start to holiday shopping, “we expect net sales and gross sales to grow in the fourth quarter.”

The Los Angeles-based company reported net sales for the third quarter were up about 10% year-on-year. For the first nine months of the year, however, Mattel reported sales were down about 2% from the same period last year.

Mattel’s third-quarter revenue was driven by sales of dolls, which at $690.5 million were up more than 20% from last year. Most of that growth came from sales of its popular Barbie doll. Action figures and building sets came in second, with the $354.5 million in third quarter sales driven mainly from its Star Wars and Jurassic World items.

Consulting firm Deloitte in September issued something of a lackluster forecast for total domestic holiday sales. Between November and January, Deloitte stated that holiday retail sales were expected to increase by about 1% from last year. The 2019 growth over the holiday was closer to 4%.

“While high unemployment and economic anxiety will weigh on overall retail sales this holiday season, reduced spending on pandemic-sensitive services such as restaurants and travel may help bolster retail holiday sales somewhat,” Daniel Bachman, Deloitte’s U.S. economic forecaster, said in September.