FNKO - Toy stocks rally as Hasbro Mattel maintain optimistic outlooks

2023-04-27 10:15:51 ET

While both Hasbro ( NASDAQ: HAS ) and Mattel ( MAT ) flagged inventory issues still hanging over the industry, maintenance of full-year targets aided a pop for the overall industry on Thursday.

Hasbro ( HAS ) shares rose over 10% on Thursday despite a miss on bottom line expectations . The Pawtucket-based toy manufacturer noted that a heightened focus on “high-growth, high-profit categories” like its Wizards of the Coast division should drive a rebound by the end of the year. Margins are expected to rebound in the toy business as inventory levels normalize as well.

“As we work through our inventory, we continue to invest in our growth priorities, reduce costs, and return cash to shareholders,” CFO Deborah Thomas said . “The first quarter is the smallest quarter of the year, and there is a lot of the year ahead of us. The team is advancing our cost savings and taking strategic steps to drive long-term shareholder value.”

The toymaker maintained above-consensus full-year guidance as a result of optimism, also highlighting expected growth in digital properties.

Prior to Hasbro’s ( HAS ) early morning update on Thursday, Mattel ( MAT ) maintained a similar level of confidence in a turnaround by late 2023 on Wednesday evening. The company expects toy demand to remain strong through the year, while the Barbie movie is also anticipated to offer a boost to sales. Importantly, the company also indicated that inventory levels will normalize by the latter half of the year.

“While retail inventory management impacted the first quarter results, the underlying business continued to perform well with overall positive consumer demand for our product and growth in market share,” CEO Ynon Kreiz said. “We believe the retail inventory situation will be corrected by the end of the first half and anticipate a return to shipping patterns, more aligned with historical trends in the second-half.”

Shares of Mattel ( MAT ) rose 5.45% in Thursday’s trading alongside Hasbro’s ( HAS ) +10.45% big pop. Meanwhile, peers like Funko ( FNKO ) +3.22% and Jakks Pacific ( JAKK ) +2.88% also rose sharply during the day’s trading.

Read Mattel’s earnings call transcript .

For further details see: