After two years of record-breaking growth in the toy industry, inflation and lower consumer demand are putting the squeeze on the sector’s 2022 year-end earnings, and Mattel is among the toycos hit hard last quarter. 

Mattel reported net sales of US$5.43 billion for the full year—flat compared to last year’s sales of nearly US$5.46 billion. The decrease was driven by a weak Q4 and holiday season, with net sales declining by 22% in Q4 to US$1.4 billion, compared to the same period last year. 

“Our fourth-quarter results were below our expectations, as the macro-economic environment was more challenging than anticipated,” said chairman and CEO Ynon Kreiz in the financial report. 

In the North American market, Mattel’s Q4 gross billings (the amounts invoiced to customers) decreased by 25% to US$657 million. This was largely driven by declines in preschool, dolls, action figures and games, but was partially offset by growth in the vehicles category as Hot Wheels’ gross billings increased 9% to US$159.5 million. 

International gross billings declined 18% during the quarter to US$635 million.  

Net sales of the iconic American Girl dolls struggled globally last year, sliding 17% to US$109 million compared to the previous year. Mattel attributes the year-end decline to disappointing sales of the 2022 Girl of the Year doll and other historical characters in the line. 

Looking forward, the toyco forecasts that revenue will continue to be relatively flat in 2023, caused by growing economic concerns and lower consumer demand. The company also expects continued retail inventory reductions to impact its total income this year by nearly 4%. 

Meanwhile, Mattel’s competitor Spin Master reported similar struggles earlier this week in its preliminary Q4 results, with revenue dropping 24% compared to Q4 2021, to US$465.8 million.