Children’s Day: Sales of Barbie fell 40 percent in the first quarter

On Children’s Day, we took a look at how our children’s favorite companies – the toys and games manufacturers – are doing on the stock markets. Toy manufacturers have to contend with the effects of high inflation and rising costs.

In the first quarter of this year, Barbie sales fell by as much as 40%. Sales of Nerf guns, Play-Doh and Peppa Pig, among others, also fell. But Nintendo’s video game „The Legend of Zelda: Tears of the Kingdom” and Hasbro’s „Magic: The Gathering” card games are selling well.

On the world stock exchanges we can find many companies producing toys and other products beloved by our children, writes eToro analyst Pawel Majtkowski. We will buy many of these items as Children’s Day gifts. Today, we will try to see how the selected companies are doing, using the wide range of information that public companies must provide.

The best-known toy company is, of course, Lego; the company was founded in 1932 in Denmark and has been producing blocks in their current form since 1958. It also co-manages theme parks – Legoland. However, Lego is not a public company, so we do not have the opportunity to invest in it and participate in the growth of its value. However, we can find many other interesting alternatives on the market.

One of them is Mattel – the manufacturer of the legendary Barbie dolls. The company’s shares have fallen by 21 percent over the past year, The company’s record share prices were recorded a decade ago, today the stock is valued almost 60 percent lower. The company reported a 21 percent drop in sales in the first quarter of this year, resulting in a loss of 24 cents per share. The company is struggling with rising costs due to inflation and a decline in orders. The mold has had to raise prices for its products due to rising raw material prices and labor costs over the past year. The first quarter’s results were strongly affected by the high inventories of large vendors, which were additionally built just a year ago. In terms of major product lines, Barbie sales fell 40 percent, while Hot Wheels toy sales rose 1 percent. Despite losses in the first quarter and a similar outlook for the second, the company is targeting full-year 2023 earnings per share of $1.17 (versus $1.25 in 2022).

Hasbro – a manufacturer of toys and games – cannot count the past year as a success either. The company’s stock lost as much as 28 percent over the 12 months, while it has gained as much over the past decade (28 percent). The company is worth about half today what it was at its peak before the outbreak of the coronavirus pandemic. In the first quarter, the company reported a loss of 16 cents per share. On the upside, however, the company reported increased demand for digital games, while consumer interest in traditional toys declined.  After a large increase in sales during the pandemic, the company is now reporting declines in toy sales related to pre-consumer spending restrictions. Sales of Nerf guns, Play-Doh cakes and Peppa Pig toys, among others, have fallen. However, revenue from sales of the collectible card game „Magic: The Gathering” rose by as much as 16 percent.

The bull market in the Japanese stock market does not bypass Nintendo – a well-known manufacturer of games and consoles. In 12 months, the company’s share price has risen by 4 percent, while in a decade it has achieved a spectacular 472 percent increase. However, the company is also struggling with declining sales, with the company planning to sell 15 million Switch consoles during its fiscal year ending March 2024, compared to nearly 18 million a year earlier. The Switch went on sale in March 2017, which means it has now been on the market for more than six years, without any major changes, and may slowly start to get away with obsolescence. However, the company has announced that it has no plans to release its successor in the current fiscal year. The company is counting on the success of its recently launched „Super Mario Bros” movie as well as on the release of this year’s most anticipated games, „The Legend of Zelda: Tears of the Kingdom”.

The company earned $3.73 billion in the fiscal year ended March 2023, down 15 percent yoy. Management forecasts that profits will fall 11 percent in the current year.

 

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