Mattel and Hasbro have different visions for the near future of the toy business. According to a fascinating article by CNBC writer Sarah Whitten. The report, “Hasbro and Mattel have very different visions for the future of the toy industry,” analyzes comments made by both companies as they project future revenues.
Hasbro is anticipating a reduction in spending on things (toys being one of those things) and an increase in spending on experiences (vacations, theater, etc.). Mattel thinks spending will continue at a brisk pace.
On Wednesday, during Mattel’s earnings call, it said it expects net sales in 2022 to grow 8% to 10%, and then expand at a high single-digit pace the following year. Previously, the company had predicted growth in the mid-single digits for both years.“Hasbro and Mattel have very different visions for the future of the toy industry,” Sarah Whitten, CNBC, February 15, 2022
Last week Hasbro said it was expecting revenue to grow in the low single digits in 2022. Deborah Thomas, the company’s chief financial officer, said that while the toy and game industry has grown at an above-trend rate over the last two years, the toymaker does not foresee this continuing, saying it expects the industry will slow or decline in the coming year.“Hasbro and Mattel have very different visions for the future of the toy industry,” Sarah Whitten, CNBC, February 15, 2022
Hasbro essentially sees the coming couple of years as a zero-sum game. A win for one side is a loss for the other. Think of it as a pizza in which your eating partner gets once less slice if you get one more. Mattel, on the other hand, sees it as a win-win. Mattel expects the pizza to get bigger, so both people will eat more pizza because there will be more of it.
As I read the article, I thought of a similar historical moment. After World War II, Sears and Montgomery Ward, major retail rivals, approached the post-war economy with very different views. Thinking back to the Great Depression that preceded the war, Montgomery Ward bet on a recession. Sears thinking forward, expected the economy to boom. Sears went on to be a mid-20th century powerhouse while Montgomery Ward shrank to irrelevance.
Which company has the proper outlook? Toy industry optimists (and I am one) are cheering Mattel on. Consumers have learned new behavioral patterns during the pandemic, and one of them is a love of play as a source of fun and respect for play as a source of education.
Toy industry pessimist anticipate that once people have a chance to take their masks off and get on a plane, they will spend their money on travel, restaurants, and entertainment. Of course, travel has become much more challenging (what’s with all these fights on planes), restaurants have gotten more expensive with poor customer service, and you can watch a movie at home.
My bet is with the Mattel view. How do you see the future? Let us know.