Mattel Sales Up 20%, Led by Hot Wheels and Lightyear Toys

Overall sales came in at $1.24 billion, ahead of analyst expectations for $1.10 billion, according

FactSet.

Excluding currency impacts, Mattel said sales were up 24%.

Chief Executive Officer Ynon Kreiz said the company expects to gain market share, with sales and demand continuing to grow in the second half of the year. He said retailers are putting more emphasis on their toy aisles, even as they work to clear excess inventory and mark down items in other categories, such as electronics.

“Parents will always prioritize spending money on their children,” Mr. Kreiz said in an interview.

He said that slower growth of Barbie, after rising at double-digit rates in recent quarters, isn’t an indication of challenges for the doll brand. A coming live-action feature movie, due out next year, should also spur demand. “Barbie is in great shape,” Mr. Kreiz said.

Like its rival

Hasbro Inc.,

HAS 4.27%

Mattel did show higher inventory levels, ending the latest quarter with nearly $1.2 billion in merchandise on its books, up 44% from a year earlier. Mr. Kreiz said retailers are ordering products to meet demand for toys tied to recent movie releases such as “Jurassic World: Dominion,” “Minions: The Rise of Gru” and “Top Gun: Maverick.” They are also ordering earlier to ensure they have enough toys available ahead of the holidays and reduce supply-chain risk.

For the period ended June 30, Mattel posted a profit of $66.4 million, or 18 cents a share, compared with a loss of $5.5 million, or 2 cents, a year earlier. Analysts expected adjusted earnings of 6 cents a share.

The company reported a drop in its adjusted gross margin to 44.9%, due to higher costs for materials and freight transportation, as well as increased royalty expenses. Mr. Kreiz said a combination of higher prices and efforts to cut costs are expected to offset inflation over time. Mattel expects inflationary pressures to moderate next year.

Despite the better-than-expected results, Mattel mostly backed its full-year outlook for sales and earnings. It does expect that the stronger dollar will lower overall sales by 2% to 3%.

The results come a day after Mattel said that it was teaming up with

Elon Musk’s

Space Exploration Technologies Corp., or SpaceX, to develop toys inspired by the company. Mattel is planning to make the products under its Matchbox brand and under its collectible Mattel Creations unit starting next year.

Overall sales came in at $1.24 billion, ahead of analyst expectations for $1.10 billion, according

FactSet.

Excluding currency impacts, Mattel said sales were up 24%.

Chief Executive Officer Ynon Kreiz said the company expects to gain market share, with sales and demand continuing to grow in the second half of the year. He said retailers are putting more emphasis on their toy aisles, even as they work to clear excess inventory and mark down items in other categories, such as electronics.

“Parents will always prioritize spending money on their children,” Mr. Kreiz said in an interview.

He said that slower growth of Barbie, after rising at double-digit rates in recent quarters, isn’t an indication of challenges for the doll brand. A coming live-action feature movie, due out next year, should also spur demand. “Barbie is in great shape,” Mr. Kreiz said.

Like its rival

Hasbro Inc.,

HAS 4.27%

Mattel did show higher inventory levels, ending the latest quarter with nearly $1.2 billion in merchandise on its books, up 44% from a year earlier. Mr. Kreiz said retailers are ordering products to meet demand for toys tied to recent movie releases such as “Jurassic World: Dominion,” “Minions: The Rise of Gru” and “Top Gun: Maverick.” They are also ordering earlier to ensure they have enough toys available ahead of the holidays and reduce supply-chain risk.

For the period ended June 30, Mattel posted a profit of $66.4 million, or 18 cents a share, compared with a loss of $5.5 million, or 2 cents, a year earlier. Analysts expected adjusted earnings of 6 cents a share.

The company reported a drop in its adjusted gross margin to 44.9%, due to higher costs for materials and freight transportation, as well as increased royalty expenses. Mr. Kreiz said a combination of higher prices and efforts to cut costs are expected to offset inflation over time. Mattel expects inflationary pressures to moderate next year.

Despite the better-than-expected results, Mattel mostly backed its full-year outlook for sales and earnings. It does expect that the stronger dollar will lower overall sales by 2% to 3%.

The results come a day after Mattel said that it was teaming up with

Elon Musk’s

Space Exploration Technologies Corp., or SpaceX, to develop toys inspired by the company. Mattel is planning to make the products under its Matchbox brand and under its collectible Mattel Creations unit starting next year.