Andrew Uerkwitz: Hey, thanks for taking the question. I’m just trying to reconcile a couple of your comments, and I may have missed this in the comments earlier because it was very thorough. You’re calling for POS to be up, you’re calling for an industry to be up, you’re going to be flat, you have a couple of lines that are effectively starting from zero Disney Trolls and Monster High in the year. So I’m just kind of curious — and I think you also said Vehicles will be up for the year. So I’m just — could you give us a little bit more color on where the weakness is, the quality of the inventory of those lines that are weaker and what’s your confidence on moving through some of those segments? Thanks.
Anthony DiSilvestro: Sure. Let me unpack the top line guidance again. I mean, overall, we expect constant currency net sales to be flat with growth in the Dolls and Vehicles categories, offset by decline in Infant, Todder, Preschool and Challenger categories, that’s primarily in Action Figures as we wrap the theatrical tie-ins in 2022. Our guidance includes a one-time negative impact from the anticipated reduction in retailer inventory levels, and that’s about three to four percentage points that’s inside the guidance. We’re also assuming underlying growth in consumer demand as measured by POS. And as Ynon said, our expectation for the toy industry is it — for it to be flat to slightly positive. So that implies that we expect to outpace the industry and gain market share in 2023.
Andrew Uerkwitz: Got it. Thank you for that clarity. And I guess my second question, if I could. What, kind of, impact should we expect from the Barbie movie? And what kind of mix do you see in the Doll category between Barbie, Monster High and American Doll and Disney Princess?
Anthony DiSilvestro: In terms of the Barbie movie, we’ve made certain assumptions and factored into our guidance the impact of you know, movie-specific toy sales, and then more closely related to the movie producer fee and estimated participation in the movie success for licensing, you know, the IP, and then again, that’s all, factored into the guidance that we gave.
Andrew Uerkwitz: Got it. Thank you so much. Appreciate it.
Ynon Kreiz: Thank you, Andrew.
Operator: Your next question comes from Arpiné Kocharyan of UBS Investment Bank.
Arpiné Kocharyan: Thanks. Thanks for taking my question. Can I go back to the inventory levels at retail for just a second? How much exactly are weeks of inventory up year-over-year? Because it seems to be that there’s this big gap between POS and sales declines for the quarter close to something like 30% delta, which shows you took very aggressive actions in the quarter for the quarter to clean that inventory? How — I’m just trying to understand how is it still impacting full year by as much as 4 percentage points. Is there anything that would break that math of how inventories can be up significantly, or are they not up significantly? Because being up is not surprising because you were you’re comping not so optimal levels of inventory given supply chain disruption in the year prior. So just trying to understand that a little bit better. And then I have a quick follow-up.
Ynon Kreiz: Yes. I think the thing to recognize the typical pattern for retailer inventory is for them to build through the first three quarters of the year and then for it to decline in the fourth quarter. So we typically do see an inventory reduction in Q4. So that’s not unusual. And although, right, it’s been a little more significant in the fourth quarter than it’s been in the past. As we look at the data, and we’ve got good data on retailer inventory levels, we do believe they’re elevated and the quantification of that is the correction we’re anticipating for 2023, which is that 3 to 4 percentage points of top line impact. So little more to burn off here going into 2023.
Arpiné Kocharyan: Okay. And then on Barbie, it’s very clear that it’s very hard to sustain margins when Barbie declines. So my question is, whether you’re planning for that brand to grow. And I think you did say you’re planning on Barbie 2 growth for the year. What offsetting factors are there in case that doesn’t happen from sort of Monster High, if you could take a moment to discuss kind of margin differential in Barbie versus Monster High, it would be super helpful. And then just an unrelated housekeeping question, does your EPS guide in core share buyback?
Richard Dickson: So I’ll start with the Barbie question and overall portfolio. First off, it’s important to recognize, Barbie actually outpaced the industry in the fourth quarter and gained global market share per NPD. It was also the number one global Dolls property and also the number two global industry property in the fourth quarter. Now the fourth quarter performance was below expectations. POS, however, was only down 1% for the quarter, which, of course, significantly outpaced shipping. When we look at the brand’s performance in context of the economic environment, retail volatility category dynamics and of course, consumer takeaway, we’re very confident that our brand is really in a strong position to continue its leadership in the industry.
And of course, its long-term potential. It continues to resonate with consumers in a profound way. And the movie expectation is just one example of that. But we’re expanding our category reach. We’re continuing to grow share, all of this is an indication of the overall health of the brand. Now as you asked, it’s also really important to recognize, and we talk a lot about category management, that Barbie is part of our Dolls portfolio, which also continues to be the number one portfolio in the world in the Doll category, and Mattel overall continued to grow share in both the quarter and the full year in the Doll category per NPD. The lineup that we have coming for 2023 really will be the year of the doll. And of course, Barbie leading the pack in the context of what she represents, but there are incredible things happening from Mattel in the Doll category, most notably, of course, the theatrical for Barbie, but the Disney Princess collection and Frozen product lines that have already started hitting shelves earlier this year have already started to gain traction.
Monster High, global rollout, as we mentioned before, and of course, the addition of Universal’s Trolls, Polly Pocket, one of our strongest legacy brands as well. So there is really a great winning hand in the doll category that will really show up on the scoreboard. And again, I think we’ll get into much more detail in our Investor Day coming up soon.
Ynon Kreiz: And Arpiné, can you repeat the question on the share buyback?
Arpiné Kocharyan: Yes. Just a quick question for Anthony. Does the EPS guide includes share buybacks or not? Thank you. Thank you, very much.
Anthony DiSilvestro: Yes. So we were happy to be able to announce that we expect to resume share repurchases in 2023. That’s really a reflection of our improved financial position, our improved outlook for free cash flow. We expect to do over $400 million in 2023. And it’s really consistent with the capital allocation priorities that we’ve talked about. And we’ve got $200 million remaining under the current authorization and yes, we’ve made some assumptions. It is reflected in our 2023 guidance.
Arpiné Kocharyan: Thank you.
Operator: Your next question comes from Linda Bolton Weiser of D.A. Davidson.
Linda Bolton Weiser: Hi. I was just wondering if you could give a little color on the 17% American Girl decline in the quarter. Since it’s mostly a DTC brand, it shouldn’t have had such channel inventory issues. So I’m just curious why the demand was down so much in the quarter. Thanks.
Richard Dickson: Yes. Thanks, Linda. Again, I’ll start by reinforcing this is truly one of the most treasured brands in the industry, let alone the Mattel Doll portfolio. And the decline was primarily due to the soft performance of our 2022 Girl of the Year and in certain historical characters. You’re right, Linda, American Girl is a premium brand where the majority of our sales are in our proprietary channels. But like general retail, we did see the POS accelerate in December, but it was not enough to offset the lower than anticipated sales that we had in October and November. We did see strong sales in our New York City flagship store, which was really encouraging. But, again, the flagship was impacted overall, because our Los Angeles store was closed as we’re in the process of relocating that store.
We continue to believe and progress on our strategy. We’re optimizing our retail footprint. We’re driving a consumer omnichannel experience. There are a lot of learnings in 2022, but ultimately, we really reaffirming our strategy as a purpose-driven premium DTC offering. 2023, there’s a lot to look forward to. We’ve got new characters, new product launch timing, new partnerships that we’re going to be revealing soon and of course, the opening of our new L. A. flagship store. Again, confident in the future and looking forward to sharing more detail with you soon.
Linda Bolton-Weiser: Okay. Thank you very much.
Ynon Kreiz: Thank you, Linda.
Operator: Your next question comes from Stephen Laszczyk of Goldman Sachs.
