All that glitters is pink this summer.
The Barbie movie is the first real smash hit film since theaters reopened after shuttering for the pandemic.
One concern on investors' minds is whether this can revive the theater industry. But another major question is: Can it revive Barbie-owner Mattel's (MAT 0.03%) flagging sales?
It's a Barbie world
The theater companies that didn't fold in the midst of complete closures may no longer be on the brink of demise, but they're operating at a lower level than they were pre-pandemic. However, the release of the Barbie movie last week, along with Universal Pictures' Oppenheimer, breathed new life into the movie industry. Many theaters had several sold-out showings around the clock.
Last weekend had the highest opening day and opening domestic weekend ticket sales in 2023, the highest since 2019, and the fourth-largest opening weekend on record. Barbie ticket sales came in way ahead of expectations, which were $95 million to $110 million, with $155 million for the weekend.
There are several ways this benefits Mattel. Acutely, it was one of the producers of the movie. Beyond that, it forged partnerships with 160 companies, from clothing retailers like Zara and Gap to food joints like Burger King (owned by Restaurant Brands International) and Coldstone Creamery. Mattel takes licensing fees for these collaborations. It also makes money from toys and products related to the film. Analysts expect Mattel to reap $100 million through the movie.
It's a Mattel world
This movie was years in the making, and it's an important part of Mattel's new strategy. Mattel lost its title as the largest toy company in the world by sales to rival Hasbro several years ago, and it went through rounds of CEOs before inaugurating Ynon Kreiz, a media veteran, and his vision for Mattel to turn to media to reignite growth.
MAT Revenue (Annual) data by YCharts.
Management is all in on the strategy, which involves creating media content based on Mattel's popular brands. Its best-selling brands include Barbie, which is the No. 1-selling doll in the world, the American Girl collection, Hot Wheels, and the Fisher-Price brand, in addition to others.
Forget Barbie; take notice of the CEO
Kreiz is showing himself to be an absolute marketing dynamo. The synergistic marketing effort with 160 high-profile partners meant there was almost no way to escape Barbie-ism over the past month. This was a real marketing coup, and there's no doubt that it was directly correlated with the movie's incredible performance at the box office. Kreiz said that Mattel and production studio Warner Bros. Discovery both made a huge push for the movie in the weeks leading up to the film's release.
Kreiz has already demonstrated that he can craft a strategy to turn the company around. Mattel made extraordinary progress in becoming a growth company again, although it's facing challenges in the inflationary environment.
There's definitely a reason for optimism with this CEO in the driver's seat. Barbie is the "cultural" moment the company was trying to create, and management understands that there won't necessarily be another hit like this in the near future. But it demonstrates that Mattel has tons of opportunity to unlock with its intellectual property.
One big pink flag
Mattel already has several other films and content in channels and in the pipeline to benefit from its loved brands. Kreiz said the movie is a template to see how it could leverage its brands and collaborate with partners to create more value. It's also a way to attract adult dollars to the brand, whereas its toys attract kids. The Barbie movie is rated PG-13, opening up an entirely new revenue-generating market.
NASDAQ: MAT
Key Data Points
The company has already seen its stock price rise 21% this year, but it won't necessarily get another boost from this movie. Now it has to do the work to show sustained improvement and gain investor confidence.
In the first quarter of 2023, sales declined 22% over last year, and it posted a net loss after positive net income in the previous year. Management expects the second quarter to be improved and for that improvement to continue into the rest of the year. It reiterated full-year guidance for sales to be flat, and earnings per share of $1.15, which means it's expecting a lot from the remainder of the year.
There's a lot to be excited about, but investors should wait for the time being and see how progress continues. In the meantime, you might enjoy a fun summer movie.
