Mattel(US:MAT)2025-07-23 22:02Financial Data and Key Metrics Changes - Net sales decreased by 6% as reported and in constant currency to $1.02 billion [7][20] - Adjusted gross margin increased by 200 basis points to 51.2% [8][25] - Adjusted earnings per share remained the same as last year at $0.19 [8][28] - Total gross billings decreased by 4% in constant currency [21] Business Line Data and Key Metrics Changes - Dolls category declined by 19% due to fewer new Barbie product launches and lower retailer promotional support [22] - Vehicles category increased by 10%, with Hot Wheels showing a 9% growth [22] - Infant, toddler, and preschool category decreased by 25%, primarily due to a decline in Fisher Price [23] - Challenger categories, including action figures, increased by 16% driven by strong results from Jurassic and Minecraft [24] Market Data and Key Metrics Changes - Gross billings in North America declined by 15%, while international gross billings increased by 9% [24][25] - EMEA region grew by 8%, Latin America by 5%, and Asia Pacific by 16% [25] Company Strategy and Development Direction - The company is focusing on operational excellence and expanding its entertainment strategy through collaborations and new product innovations [12][13] - A strategic collaboration with OpenAI aims to leverage new technologies for brand expansion [12] - The company plans to release one to two films per year starting in 2026, with projects in post-production [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing trade uncertainty impacting the U.S. business but expressed confidence in brand appeal and long-term competitive positioning [8][31] - Consumer demand for toys remains strong, with expectations for continued growth in the toy industry [9][51] - The company has resumed guidance for 2025, projecting net sales growth of 1% to 3% in constant currency [32] Other Important Information - The company repurchased $50 million of shares in the quarter, targeting $600 million for the full year [28][33] - Cash used for operations increased to $275 million compared to $217 million in the prior year [28] Q&A Session Summary Question: Major factors affecting guidance range - Management discussed the impact of lowered top-line guidance and tariff effects on the bottom line, while implementing actions to mitigate headwinds [36][39] Question: Pricing strategy in response to tariffs - Management stated that pricing actions have been implemented to keep consumer prices low, with no additional price increases expected this year [43][46] Question: Impact of retail ordering patterns - Management indicated that shifts in ordering patterns and direct shipping delays affected sales recognition, but most sales are expected to be captured in the second half of the year [71][74] Question: Consumer price sensitivity - Management does not see increased price sensitivity among consumers compared to last year, emphasizing a broad range of products at various price points [64][65] Question: Future performance of Fisher Price - Management expects improved performance for Fisher Price in the second half of the year due to new innovations and product launches [66][67] Question: Tariff impact on gross margin - Management estimated total tariff exposure for the year to be less than $100 million, with mitigating actions in place to offset impacts [78][79] Question: Channel inventory levels - Management confirmed that inventory levels are appropriate and aligned with retail needs, with no significant disruptions expected [82][83]