Mattel Inc forecast 2023 earnings below analyst expectations on Wednesday, joining rival Hasbro Inc in feeling the brunt of stubbornly high inflation that has hit demand for toys and games. While the toy industry has historically been more resilient to economic downturns than other discretionary sectors, Mattel said demand dropped off suddenly and sharply in October and November, leading to more profit-margin denting clearance sales to get rid of excess inventory. "As we enter 2023 we expect it to be a challenging environment for consumers, not just in toys, but in general, so there could be volatility," Mattel Chief Executive Officer Ynon Kreiz told Reuters.
It's been nearly a week now since Hasbro (NASDAQ: HAS) dropped a bombshell on the stock market, announcing layoffs, an executive departure, and an earnings warning -- and sending its stock down 8% in a day. On Thursday last week, after trading was safely closed for the day, Hasbro revealed plans to lay off 15% of its global workforce -- 1,000 people -- in an effort to combat the cost of plunging sales at the toys and entertainment conglomerate. The good news is that Hasbro is still -- at least as of fourth-quarter 2022 -- enjoying "strong growth in Wizards of the Coast and Digital Gaming, Hasbro Pulse, and our licensing business."
e.l.f. Beauty and Hasbro have been highlighted as Zacks Bull and Bear of the Day.