Mattel

Mattel repeatedly told analysts the company was benefiting from price increases beyond the cost of inflation

Mattel’s CEO told analysts that the company was benefiting from “from pricing actions and cost savings, which more than offset significant cost inflation. ““YNON KREIZ, EXECUTIVE CHAIRMAN & CEO, MATTEL, INC.: Total company POS was essentially flat in the third quarter with growth in all international regions, offset by a decline in North America. Our 2022 price increases have been successfully implemented. While it is still early, we have not seen a meaningful impact on consumer demand. Adjusted EBITDA benefited from pricing actions and cost savings, which more than offset significant cost inflation. We are maintaining guidance for the full year 2022 Net Sales growth in Constant Currency of 8% to 10%, yet we do see a more challenging macroeconomic environment and increased volatility heading into the latter part of the year.” (Q3 2022 Mattel Inc Earnings Call, 10/25/2022)

Mattel’s CEO credited their profit margin increase “ as the benefit of pricing actions and cost savings more than offset cost inflation.” “ANTHONY P. DISILVESTRO, CFO, MATTEL, INC.: Thanks, Ynon, and good afternoon. As Ynon said, we achieved good results for the quarter, in the midst of a challenging macroeconomic environment. We generated Net Sales of $1.756 billion, flat to the prior year and up 3% excluding the negative impact of currency translation. Adjusted Gross Margin increased by 50 basis points as the benefit of pricing actions and cost savings more than offset cost inflation. Adjusted Operating Income was $398 million, declining 1% due primarily to an increase in advertising expense, mostly offset by the increased Adjusted Gross Margin percentage.” (Q3 2022 Mattel Inc Earnings Call, 10/25/2022)

Mattel’s CFO: Adjusted Gross Margin increased 50 basis points to 48.3% as pricing and cost savings exceeded significant cost inflation.” “ANTHONY P. DISILVESTRO, CFO, MATTEL, INC.: Quarter end retail inventory levels were up in both dollars and weeks of supply as we head into the holiday season. Inventory is of good quality, and we are working closely with our partners to meet the anticipated acceleration in POS. Adjusted Gross Margin increased 50 basis points to 48.3% as pricing and cost savings exceeded significant cost inflation. Here are the components of the increase in Gross Margin. On the positive side, pricing, primarily the benefit of our midyear actions, contributed 240 basis points. Savings from Optimizing For Growth added 140 basis points, and other factors added 30 basis points. These gains were partly offset by the impact of cost inflation, a negative 330 basis points; and royalties, negative 30 basis points, associated with the high growth of licensed properties.” (Q3 2022 Mattel Inc Earnings Call, 10/25/2022)

Mattel CFO said pricing actions were “going well,” with little consumer response

Mattel’s CFO said the company was offsetting costs by increasing prices and planned to continue increasing prices through the end of 2021. “Anthony DiSilvestro, Chief Financial Officer: Sure. As we said in the remarks, pricing did have a benefit of 110 basis points in Q3, but that does not not yet reflect all the incremental pricing actions that we’re implementing in the second half. So, we should have a greater pricing benefit in Q4. That being said, our gross margin guidance implies a decline of about 300 basis points of gross margin in Q4. Obviously, the biggest driver of that is cost inflation, which we expect to partly offset with the pricing actions we’re implementing, as well as continued savings from our Optimizing for Growth program. It’s a little early to talk about 2022, and we look forward to providing guidance for ’22 on our fourth quarter earnings call. And lastly, I’ll just add, I mean, as Ynon stated in the remarks, we do expect to exceed $1 billion of adjusted EBITDA in 2022.”  (Mattel Inc Q3 2021 Earnings Call, 10/21/2021)

Mattel reported a much higher increase in income than in costs

In October 2021, Mattel reported that its third quarter net income surged 161% over the previous year, while costs had increased by 14%. “Third-quarter net income jumped 161% year-over-year to $812.6 million, or $2.29 per share, bolstered by a $510 million noncash benefit from the release of reserves on some deferred tax assets. Costs for the company increased 14% from a year ago to $919.8 million, which the company attributed to inflation. Those costs were slightly offset by higher pricing, the company said.” (Barron’s, 10/21/2021)

Mattel’s CFO: “… we are implementing those pricing actions. It’s going well. We haven’t seen any negative response in terms of consumer purchases that will continue to implement those programs.” Anthony DiSilvestro, Chief Financial Officer: “We’re not going to get specific on the magnitude of the pricing action, for competitive regions — reasons, but we are implementing those pricing actions. It’s going well. We haven’t seen any negative response in terms of consumer purchases that will continue to implement those programs.” (Mattel Inc Q3 2021 Earnings Call, 10/21/2021)