Mattel said on Thursday that its revenue jumped 20 percent in the second quarter despite rising prices, a sign that consumers were continuing to buy Polly Pocket dolls and Mega construction sets despite rising inflation.
Revenue for the April-through-June period was $1.2 billion, up from $1 billion in the same quarter last year, the toymaker said in a statement. The company swung to a profit of $66.4 million in the quarter after reporting a loss of $5.5 million last year.
After struggling for several years, the company has been in turnaround mode ever since Ynon Kreiz took over as chief executive in 2018. The strong second-quarter earnings were a result of the company’s efforts to capitalize on its intellectual property and expand its entertainment offerings, Mr. Kreiz said in an interview on Thursday.
“We really shifted from being a manufacturing company that was making items to an I.P.-driven company that is managing franchises,” Mr. Kreiz said. “Our company is now in growth mode.”
The toymaker’s earnings were strong despite rising costs for materials and higher inflation, which rose 9.1 percent in June, putting a squeeze on consumers.
But toy sales tend to be resilient in downtimes because parents do not want to disappoint their children, said Linda Bolton Weiser, an analyst with D.A. Davidson who covers the toy industry.
“Toys are considered a soft cyclical,” she said. “They hold up really well in a recession.”
Like its main rival, Hasbro, Mattel faces a new threat in a strong dollar. The company said its revenue would have been 4 percentage points higher if not for fluctuations in foreign currency rates overseas.
“This is going to be hitting a lot of multinational companies,” Ms. Bolton Weiser said. “The dollar is strengthening every day.”
Mattel maintained its guidance for revenue growth of 8 percent to 10 percent for the year, saying it will be able to meet demand in the all-important holiday season.
“We are working closely with our partners to make sure there is product on shelves,” Mr. Kreiz said, adding that Mattel is working with its factories and third-party vendors around the world. “A big part of our success is how we manage our supply chain.”
After falling to $7.42 in the early days of the pandemic, Mattel’s stock price has risen steadily.