Mattel CEO: ‘Barbie’ movie shaping up to be an ‘iconic cultural phenomenon’

Mattel CEO Ynon Kreiz discuss company earnings, the state of the toy industry, recessionary risks, inflation, market share growth, currency fluctuations, consumer demand, supply chain woes, the company’s collaboration with Space X, the ‘Barbie’ film, and navigating post-pandemic.

Video transcript

- It's all fun and games for Mattel investors. The toy maker reporting an earnings beat as it pushes forward with expanding its IP, wrapping filming of its Barbie movie and inking a merchandise deal with SpaceX. But can Mattel keep smiles going on the street? As it commits to continued price increases for its products?

Joining us now is Ynon Kreiz, Mattel chairman and CEO. Ynon, always great to see you here. Look, there was a lot of nervous anticipation into this quarter on the Street. Would you see any effects of the economic slowdown? I would argue you didn't see it. Help us understand that.

YNON KREIZ: Well, Hi, Brian. These were excellent results for Mattel with our eighth consecutive quarter of top-line growth. Our profits grew significantly, with adjusted operating income up 82% despite high inflation. And following a record first half, we expect continued growth in the second half and are planning for increase in consumer demand in the holiday season. So we're very happy with the position we are in and expect to win market share going forward.

- Why do you think consumers aren't cutting back on toys in this environment?

YNON KREIZ: Well, toys have always performed well in a challenging economic environment. The toy industry as a whole has been performing well year-to-date. And we believe it will grow for the full year and continue to grow going forward. You need to remember that the toy industry is a growth industry. It's been growing for the past 10 years in constant currency, particularly strongly in the last two years.

We know that parents will always prioritize spending money on their children, especially when it comes to quality products and trusted brands. And this is exactly where we excel and why we've been able to grow market share over the past two years and expect to do it again this year.

- Would you say you are, in fact, in a challenging environment?

YNON KREIZ: No, it's not that we are insulated. We are also being impacted by inflation and currency fluctuations. That said, we have been navigating our way through the pandemic. And we are seeing demand for toys.

So we believe the industry as a whole is in a good position. We know that the retailers see the toy category as strategic. It drives foot traffic. It's experiential. And together we see high potential for the category as a whole.

- There's a lot of large retailers, Ynon, right now out there aggressively cutting inventory. And we're talking billions of dollars in inventory. Is those discounts finding their ways the toy aisles?

YNON KREIZ: We're not seeing any discounts. We know that retailers order product to meet the expected growth in consumer demand, including, in our case, for product tied to major theatrical summer releases. And retailers increased inventory ahead of the holiday season to reduce supply chain risk.

So this is part of the dynamic that we're seeing right now. We believe our own retail inventories tied to our product, those levels are appropriate to meet the projected increase in consumer demand. And we continue to work closely with our retail partners to make sure that there's enough product at the right time for consumer to meet the growing demand.

- Your reiteration of your 2023 targets is getting a lot of attention, because everyone is looking for an economic slowdown next year. How do you see the business doing next year if we are in recession?

YNON KREIZ: Yeah, we reiterated our full-year guidance for strong top-line growth and increased profitability. In spite of significant inflation and the negative currency impact, next year is shaping up very well for Mattel, with a strong innovation pipeline and the broadening of our portfolio, including the global rollout of "Monster High," the return of Disney princess in "Frozen" franchises, which is going to be very exciting, and the addition of "Trolls."

So we feel good about the second half of this year and 2023. We also reiterated our goals for 2023 for high single-digit growth in constant currency and adjusted operating income margin of 16% to 17%. So we continue to execute our strategy and feel very good about our position.

- Ynon, I don't know if you can see me on that side of the camera, but I want to pull up a picture. I actually tried to channel my inner Ken here. There is Ryan Gosling with me on the side here. It's just I got to have fun here at Yahoo Finance.

But look, I mean, that is one of many photos from the now recently wrapped Barbie movie. It's spreading all over the internet. I mean, do you have a sales estimate here on how big this movie could be next year? And what does it mean for the actual sales of those products?

YNON KREIZ: Well, you do very well with that photo.

- Ah, I appreciate it. There we go. There we go.

YNON KREIZ: You have a future here. But all kidding aside, the Barbie movie is shaping up to be something very special. We believe it has all of the ingredients to be an iconic cultural phenomenon. We just wrapped production yesterday, exactly one year ahead of the planned theatrical release by Warner Brothers. Ryan Gosling, Margot Robbie, with Greta Gerwig directing, it doesn't get better than that.

And it's really a masterpiece. And we couldn't be more happy with the way this is looking so far. There's more work to do. But it's already shaping up very, very well.

- Well, in case anyone was wondering out there, I do have Ryan Gosling-like abs. Ynon, I'll end it on this one. Big deal with SpaceX this week. I mean, is this a financial needle mover for you? I imagine it is a good thing for kids, of course, to start playing with space products early on, SpaceX, of course, the top name in the space. But what does this mean for your bottom line?

YNON KREIZ: Look, this is a global partnership to create space exploration toys and collectibles under the Matchbox brand. The toys will come out next year. We will sell the collectible figures on Mattel Creation, our D2C, direct-to-consumer website. This is really about scaling our portfolio. And it speaks to our innovation and creativity and thinking out of the box in bringing new partners to the toy aisle.

We haven't broken down this specific arrangement. But all in all, we're doing a really good job in scaling our portfolio, broadening the offering, and reaching and touching consumers in many different ways, exciting ways, and catering for different tastes and audience demographics.

- Well, thanks for playing along on that photo. Always great to get some time with you. Ynon Kreiz, Mattel chairman and CEO, have a great weekend. I'll talk to you soon.

YNON KREIZ: Thank you.