By: Cole Watson and Ryan Tuchow 

Toy industry giants Mattel and Hasbro both experienced declines in Q1, as the challenges of 2022 trickled into 2023.

After announcing a new strategy to team up on co-branded toys earlier this week, the two companies released first-quarter reports today showing drops in sales (Mattel) and revenue (Hasbro). Attributing the decreases to ongoing challenges such as inventory management, the toycos each found reasons to paint an optimistic outlook for the year ahead.

Mattel’s overall net sales dropped by 22% to US$815 million, and this was consistent across all major categories—except vehicles, which grew by just 1% to US$283.6 million. Otherwise, significant declines were posted by action figures, building sets, games and “other” (down 39% to US$171.5 million), infant, toddler and preschool (down 27% to US$150 million) and dolls (down 23% to US$306 million).

Two of Mattel’s top three brands were hit hard, with Barbie impacted the most. The doll brand’s gross billings (Mattel’s standard reporting metric) dropped by 41% in Q1 to US$176.9 million, and Fisher-Price was also down by 27% to US$125.7 million. For its part, Hot Wheels (pictured top) was up, but only by 1% to US$244.9 million.

Reduced retailer inventories were noted as the main factor contributing to these declines, but in a release, Mattel CFO Anthony DiSilvestro said he expects consumer demand to grow in the year ahead.

The Q1 story is much the same at Hasbro, which brought in US$1 billion in quarterly net revenue, a 14% drop from the same period in 2022. The company’s consumer products business was hit the hardest, generating 23% less revenue (US$520 million compared to US$672 million) than in Q1 last year. Entertainment revenue was also down by 19% to US$185 million, due to a lack of new content releases.

Despite the losses, Hasbro’s Q1 results exceeded expectations, and the company is on track to reach its year-end targets, said CEO Chris Cocks in a release. CFO Deborah Thomas added that Hasbro’s focus for the quarter was to offload its excess inventory from 2022.

Hasbro’s Wizards of the Coast and digital gaming segment was the only division to post growth in Q1, with net revenue up by 12% to US$295 million. This was driven by strong sales performances by Phyrexia: All Will Be One booster packs and reprint sets for Magic: The Gathering (pictured bottom).

Interestingly, APAC and Latin America were bright spots for both companies geographically—and for the second year in a row. Hasbro’s net revenues were up 21% in APAC and 20% in LatAm, and Mattel followed the pattern but posted single-digit growth (up 9% in APAC and 5% in LatAm).