Mattel delivers beat-and-raise quarter but shares drop 10% on a lighter outlook for holiday period

Mattel (NASDAQ:) reported stronger-than-expected third-quarter results, however, its shares still fell more than 10% in after-hours trading.

of $1.08 topped the analyst estimate of $0.86, while revenue of $1.92 billion was above the consensus estimate of $1.85 billion.

Gross billings were reported at $2.12 billion, fueled by a 10% rise in North America and 6% jump in worldwide gross billings.

“We are very well positioned competitively and expect to gain market share in the fourth quarter and full year,” CEO Ynon Kreiz said.

The company sees adjusted EPS of $1.20 for the full year, up from the prior forecast of $1.15. FY net sales should be “comparable” to FY22 sales of $5.44 billion.

Mattel said it bought back $60 million worth of shares in Q3.

Despite the beat and raise, investors are likely disappointed about Mattel’s unchanged outlook for 2023 sales and only slightly improved earnings view.

Morgan Stanley analysts, who cut the price target to $25 per share, noted that the “muted” flow-through to the full-year guide is disappointing.

“This is understandable, though perhaps not entirely unexpected given well-telegraphed industry weakness,” they wrote.

Stifel analysts added:

“We’ve made material downward revisions to our 4Q estimates, though we see Mattel as a share gainer in a weaker toy market, and are forecasting healthy shipment growth and meaningful margin expansion over the near term.”