Things are going good over there at Mattel. So good in fact that 4Q profits are up and the new brands are performing strong. All of this will be capped off by a price hike later this year… Say what? That’s the strange and (greedy?) philosphy over at the house of Barbie and hopefully something that won’t directly cause toy collectors problems. Mattel has said that they will be RAISING prices across the board. The usual are being blamed, packaging costs and the cost of Chinese labor as the main reasons for the markups.
Speaking from the Nuremberg International Toy Fair, chief operating officer Bryan Stockton told Sky News that Mattel will be looking at reducing costs but also increasing prices in the coming year. Worldwide sales grew 9% in the three months to December 31, with Barbie and American Girl leading the way.
Barbie sales in the UK surged 35% in 2010, but the only Mattel toy to make it onto the Christmas top-ten sellers list was the Toy Story 3 Jet Pack with Buzz Lightyear. Mattel’s new licenses with Thomas and Friends and World Wrestling Entertainment also have performed well.
The company said inventory increased compared with a year ago, when the company held back due to uncertainty about the economy. Mattel, facing rising costs for resin, packaging, labour and shipping, as well as the strengthening Chinese currency, plans to raise prices in the second quarter by mid- to high-single-digit percentages.
It is also spending “at a pretty high rate” on its long-running litigation MGA over the Bratz doll property. The second round of a copyright infringement case should last three or four months.
For the year, Mattel Inc., based in El Segundo, Calif., said net income rose 30 per cent to $684.9 million, or $1.88 per share, while revenue rose 8 per cent to $5.86 billion.
Yes, you read correctly. Mattel is actually making MORE money and had a 4th Quarter rise in profits. This is believed to be even better than Hasbro, which is rumored to have a slight decrease in profits for the quarter… Although they won’t post that financial news until Monday.
So how is it that new properties like Toy Story, WWE and Thomas the Tank are doing so well, but price increases are coming? Apparently Hot Wheels was down and that’s a big chunk of Mattel, as well as the Bratz lawsuit going on forever. Fisher-Price is supposedly doing well, but whether that offsets the dip in Hot Wheels, I don’t know.
Price hikes is the absolute LAST thing I want to hear from Mattel, though. I guess we’ll see if it causes problems for popular “collector” brands, or if these price increases will mostly hit the backbone corners of “kids” toys. Of all the collector oriented properties, I would think the WWE would be the least affected as it obviously has larger and stronger sales than DC or MOTU.
None the less, put on your tin foil caps and stock up on Snausages, because it’s a toy price hike Armageddon!