Mattel CEO Ynon Kreiz joins Yahoo Finance Live to discuss company earnings, the challenging economy, maintaining full-year guidance, profit expectations, inflation, and the outlook for growth.

Video Transcript

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BRIAN SOZZI: Shares of Mattel are in focus after the toy maker trimmed its full-year guidance in its third quarter earnings report last night, saying market volatility and other macroeconomic risks has forced it to reformulate its expectations. Mattel Chairman and CEO Ynon Kreiz joins us now to discuss. Ynon, always great to get some time with you. Your top takeaway on the quarter?

YNON KREIZ: Thank you, Brian, for inviting me. Well, this was a good quarter for Mattel, with the ninth straight quarter of year-over-year growth in constant currency. Look, as you know, we are in the midst of a challenging economic environment.

But our year-to-date results of double-digit growth in net sales, adjusted EBITDA, adjusted operating income, and adjusted EPS showed that we are successfully navigating a complex landscape, and our strategy is working. We believe the fundamentals are strong. And we are very confident about our multiyear growth trajectory.

BRIAN SOZZI: Ynon, I've been covering you and the turnaround story of Mattel for a good bit now. I wasn't used to that tone on that conference call last night just highlighting some slowing you're seeing in the market. How severe has that gotten?

YNON KREIZ: Look, there's no-- it's not a secret that the economy, the broader economy, is currently challenging. But our year-to-date results do show and do demonstrate that we are on the right track. We are maintaining guidance for full-year growth in net sales in constant currency of 8% to 10% and look forward to the holiday season.

We modestly revised our profit expectation to allow and accommodate for the inflation that we're seeing. But we still expect a growth year for Mattel, both at the top line and the bottom line, and also expect 2023 to be a growth year, both top line and bottom line. So we are very confident about our trajectory. Our brands are resonating, thriving with continued engagement and cultural impact. And we're very confident about our strategy and execution.

BRIAN SOZZI: You did highlight the need that there might be a little more promotions in the holiday quarter than I think a lot of investors maybe expected. How much discounting do you expect to be doing?

YNON KREIZ: Look, quarter-to-date, consumer demand is in line with expectation, and we're pleased with our performance. Shoppers are returning to traditional purchasing patterns closer to the holiday, and we expect demand to accelerate. We are working closely with our retail partners to meet the anticipated demand. We have more advertising and promotion.

We secured more shelf space and retailer support compared to last year. And we also expect to-- and also, we have great holiday toys representation and much stronger in-stock. So, yes, we are going to increase activity, promotional activity, but we are well-positioned for the fourth quarter and the holiday season, which is why we are maintaining our full-year guidance of net sales growth in 8% to 10% in constant currency.

BRIAN SOZZI: Ynon, I'm old. I'm not as cool as I used to be. What are some of the top toys this holiday season?

YNON KREIZ: Well, Monster High is going to be a very exciting offering as we prepare for the global launch next year, Hot Wheels Car Wash, Lightyear products. Fisher-Price has a great musical toy called Bouncin' Beads. And the Dreamhouse, of course, will always be on the top of the toy list for every holiday season. So an exciting broad offering across a pretty large spectrum of product that we're very excited about.

BRIAN SOZZI: I remember having one of those car washes as a kid, Ynon. I've got to send you-- a photo exists somewhere. But these are some cool toys. That is some interesting stuff. How is the pricing on these compared to last year? Do you plan to take more pricing?

YNON KREIZ: Look, we increased pricing in the second half of this year. We were able to successfully implement those increases. And it's too early to tell, but so far, we haven't seen a meaningful impact on consumer demand. Important to say that as it relates to inflation, we are beginning to see some improvement in the cost of ocean freight and materials.

We expect inflation to moderate in 2023. And in addition to the savings that we're looking to generate of $250 million by the end of '23, we expect the combination of pricing and cost savings to more than offset cost inflation and contribute to margin expansion over time. So we are proactively managing our business in this environment to ensure that we are set up for long-term success.

BRIAN SOZZI: Ynon, you might be the first CEO that we've talked to, to really highlight a peak in inflation and things cooling off a bit. I certainly-- certainly that is good to hear and a different tone. Let's go into Barbie because Barbie's been an interesting story the past year or two here, a real growth mechanism for the company. What's on tap for that brand next year?

YNON KREIZ: We're very confident about the long-term growth trajectory of Barbie. Barbie was the number one global doll property in the third quarter and year-to-date. Year-to-date, Barbie is up with-- which is an excellent achievement when compared to last year, which was the highest on record for Barbie of all times. We look forward to next year, which will have an exciting innovation pipeline and new content slate with Netflix and, of course, the highly anticipated "Barbie" movie, our first theatrical release that will come out this summer.

Also, important to note that Barbie doubled in size over the past five years and was the number one global toy property overall, not just in dolls, but overall in the last two years. And we really see that as a proof point to the strength of this incredible franchise. Very confident about Barbie and proud to have it as our leading franchise.

BRIAN SOZZI: It does seem like, Ynon-- and we've talked about this in the past-- you've-- all the seeds that you have planted in terms of content and, of course, you highlight the "Barbie" movie, are now coming to fruition. This will start to hit the market next year and beyond. How much will you spend on content next year?

YNON KREIZ: Well, we employ a capital light strategy. We're not spending money on content. We are leveraging our brands. We collaborate with the best filmmakers and content creators out there, both-- not just film, but also in television, and partner with major studios to create, produce, distribute, and commercialize our brands on the big screen, and also in episodic content.

We have a very exciting slate of 14 additional movies other than "Barbie" that we are currently developing with some of the best and most prolific creators of this generation. And this is going to grow because we have more in the pipeline that we haven't announced. And, likewise, Mattel Television is thriving with 12 series and specials that will be on air this year, so to speak, because some are actually via streaming.

Eight of those are new, four are returning. "Monster High" live action television movie musical just launched on Nickelodeon, and we greenlit the second movie. And we continue to roll out more content, such as Thomas and Friends, Polly Pocket, Fireman Sam, depends on new-- more Barbie product, Pictionary game show, and the list goes on and on. So exciting to see how our brands resonate with consumers and attract creators to collaborate with us because like us, they are also very excited to reimagine and create an expression of product in content.

BRIAN SOZZI: When's the "Pokémon" movie hitting, Ynon?

YNON KREIZ: Well, we licensed recently the Pokémon brand, which is one of the strongest franchises this year. For MEGA, for building sets, it's been a great driver for us. And we're very proud to work with The Pokémon Company in expressing their IP in combination with our products. So it's a great partnership.

And this really speaks to how we elevate Mattel to become the partner of choice for the major entertainment companies and where we bring our capabilities, our global scale, our innovation, our supply chain, and commercial capabilities, collaborate with other owners, other franchises, and take them to the next level and create evergreen franchises, just like we do with our own.

BRIAN SOZZI: I'm just being flagged. Before I let you go, Ynon, there was just a new Pokémon movie, "Detective Pikachu." That's how you're getting old when you do not realize those types of movies are in the market. We'll leave it there for now. Good luck this holiday season. Mattel CEO Ynon Kreiz, we'll talk to you soon.

YNON KREIZ: Thank you so much.