Mattel points stern warning about its toy costs | World Market Information
Mattel, which owns toy manufacturers resembling Barbie, Scorching Wheels, Fisher-Value, and so forth., not too long ago garnered worldwide consideration after its viral “Barbie” film broke box workplace data and have become the highest-grossing movie in 2023, incomes over $1.4 billion worldwide. The toymaker, nevertheless, not too long ago confronted a slight dip in gross sales for its hottest product because the momentum over the movie died down. In Mattel’s fourth-quarter earnings report for 2024, it revealed that its internet gross sales within the U.S. solely elevated 1% year-over-year during the vacation season. 💰💸 Do not miss the transfer: Subscribe to TheStreet’s free every day e-newsletter💰💸The company claimed that whereas its Scorching Wheels toys, motion figures and video games confirmed growth during the quarter, it did see declines in its toddler, toddler and preschool merchandise. It additionally famous that its doll gross sales shrunk, primarily as a result of low Barbie gross sales.Associated: 5 main retail chains that threatened to raise costs in 2025During an earnings call on Feb. 4, Mattel (MAT) Chief Monetary Officer Anthony DiSilvestro claimed that the lower in doll gross sales comes during a time when the company is wrapping “the Barbie movie benefits from the prior year.”Mattel contemplates a main change to its pricingAmid this latest decline in doll gross sales, Mattel issued a stern warning about its future pricing after President Donald Trump applied a main change. On Feb. 4, Trump imposed a 10% tariff on all items imported from China. In response, China imposed tariffs on a quantity of American imports. Tariffs are taxes firms pay to import items from abroad, and the additional value is commonly handed down to shoppers.
Mattel Inc. model Barbie toys for sale at a Goal store on Black Friday in Chicago, Illinois, US, on Friday, Nov. 25, 2022. Bloomberg/Getty Photos
Trump additionally threatened to impose 25% tariffs on all items from Mexico and Canada on Feb. 4, however he agreed to delay this determination for 30 days. Many shoppers and economists have expressed concern in regards to the domino impact tariffs might have on shoppers’ wallets and the economic system as a entire. Some of the highest U.S. imports from China embody cell telephones, computer systems, toys, video games, clothes, and so forth. Through the earnings call, DiSilvestro revealed that Mattel is anticipating the affect of the latest tariffs on China and probably on Mexico and Canada. He stated that the company was taking “mitigating actions” resembling “leveraging the strength” of its provide chain and weighing “potential price increases.”Associated: GameStop makes a drastic transfer amid weak gross sales“We do work closely with our retail partners here to achieve the right balance and always keep consumers in mind when we consider pricing actions,” stated DiSilvestro.He additionally stated that the company has been “continuously optimizing and diversifying” its manufacturing footprint and sources its merchandise from seven totally different nations.“In 2025, we expect China will represent less than 40% of global production for our toys and as compared to an industry average of about 80%,” stated DiSilvestro. “And with the U.S. representing about half of our global toy sales, our tariff exposure in the U.S. related to China should be about 20% of global production.”
A lady seems at Mattel Inc. Fisher-Value model toys on show for sale at a Goal Corp. store within the Queens borough of New York in 2019. Bloomberg/Getty Photos
DiSilvestro additionally stated that Mattel sources much less than 10% of its toys from Mexico and doesn’t source from Canada. “By 2027, no single country is expected to represent more than about 25% of total global production or about half of that in terms of U.S. sales,” stated DiSilvestro. “Now, with respect to the tariffs, our teams have been fully engaged in analyzing and planning for a range of scenarios.”Trump’s tariffs can have unintended consequencesMany firms resembling Walmart (WMT) , AutoZone (AZO) , and Finest Purchase (BBY) have additionally beforehand warned that they’re considering growing their costs as a result of Trump’s tariffs.Extra Retail:
These tariffs are predicted to have a main affect on the economic system. A latest research from the Tax Basis estimates that the tariffs on China, Mexico, and Canada that have been proposed to enter impact on Feb. 4 would lower financial output, the worth of all gross sales of items and companies, by 0.4%.It additionally predicts that these tariffs will increase taxes by $1.1 trillion between 2025 and 2034 on a typical foundation, totaling an average tax increase of more than $800 per U.S. family in 2025.Associated: Veteran fund supervisor points dire S&P 500 warning for 2025
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