Franchise enthusiasts are flocking to theaters this Friday to witness one of the most highly anticipated blockbusters of the year. The influence of Barbie can be seen in pop-up cafes, brand collaborations, and even social media stickers, capturing the attention of consumers.
Experts are projecting that the upcoming Warner Bros. (ticker: WBD) film will rake in over $90 million during its opening weekend. If the movie’s success at the box office even comes close to matching its immense marketing buzz, industry analysts believe it could mark the beginning of a new era for Mattel (ticker: MAT), the parent company of Barbie.
As the creators of iconic consumer brands such as Barbie, Polly Pockets, and Hot Wheels, Mattel has been actively developing 14 other films that aim to replicate the cultural impact and financial success of Barbie. In fact, Mattel executives have been very vocal about the significance of director Greta Gerwig’s Barbie movie, referring to it as a “milestone moment” for the company during an investor meeting in March.
Mattel’s Chief Executive, Ynon Kreiz, joined the company in 2018, bringing with him a background in television. According to UBS analyst Arpiné Kocharyan, Kreiz had a clear vision for how Mattel could capitalize on monetizing its brands in the media industry.
“The Barbie movie will serve as the litmus test for his strategy,” said Kocharyan. “He recognized from the very beginning that the stakes would be high, especially for a brand like Barbie, where any misstep could have significant repercussions.”
Kocharyan emphasizes that execution is key when creating a film centered around Barbie, an American symbol that has faced criticism in the past for promoting unrealistic body image and materialism.
Despite initial hesitations due to Barbie’s controversial history and the massive sales boom resulting from the pandemic, Mattel has experienced a recent upswing with soaring toy sales as parents sought ways to keep their children occupied at home. However, skepticism remained regarding the growth forecast for the company’s flagship brand earlier this year.
Then, a comprehensive marketing campaign transformed Barbie into a cultural phenomenon, elevating the potential success of Mattel’s film. As a result, the company’s stock has risen by 18% this year and has continued its upward climb, increasing by 20% leading up to the film’s opening weekend.
The Success of Barbie: A Cultural Resurgence
Mattel, the renowned toy manufacturing company, is capitalizing on consumer excitement for the Barbie movie by engaging in over 100 lucrative licensing deals. Some noteworthy brands, such as Gap, Crocs, Forever 21, and Burger King, have partnered with Mattel to bring Barbie-licensed products to the market. The profitability of these products is forecasted to be incredibly high, with analysts estimating a profit margin as high as 95%. In addition to profits from licensing deals, Mattel is expected to earn at least $130 million in royalties from Barbie consumer product sales, which will significantly impact their overall earnings per share.
The success of consumer products associated with the Barbie film can have a positive effect on Mattel as a whole. To showcase their support, some adults have embraced “Barbie fever” by donning flamenco pink moviegoing outfits and sharing countless posts on social media. Morningstar analyst Jaime Katz believes that the movie’s ability to captivate older audiences will extend the reach of Mattel’s products throughout the holiday season.
Barbie’s popularity spans across generations, making it a beloved brand since its inception in the 1960s. Katz points out that adults are the ones who ultimately purchase the toy items, regardless of their age group or generation. With this in mind, Mattel anticipates a boost in sales for the remainder of the year due to the Barbie movie’s release. However, D.A. Davidson analyst Linda Bolton Weiser is skeptical that the company will surpass its own second-half guidance, even considering Barbie’s immense popularity. She also doesn’t expect the film to have a significant impact on Mattel’s earnings.
Nevertheless, Weiser emphasizes the long-term opportunity that lies ahead—a chance to solidify Barbie’s positive cultural reception and cultivate brand loyalty through the film’s success. In the past, Barbie products may not have been effectively positioned in the market, leading to a negative perception among some consumers. Now, with interest in Barbie at an all-time high, the spotlight is on Mattel to seize the opportunity and capitalize on Barbie’s well-deserved cultural resurgence.
Regardless of what the future holds for the franchise, it’s undeniable that the Barbie film has already opened doors to millions of fans, granting them access to their dream house.
