Mattel posts profit, but sales fall
Barbie continues to be the bright spot for the El Segundo toy maker, but other brands lag.
Mattel Inc. eked out a small profit in the third quarter, but the troubled toy maker, its problems exacerbated by Toys R Us’ demise and softer demand in China and Europe, said its quarterly sales again fell from a year earlier.
The El Segundo company’s flagship Barbie line of dolls continued to be the bright spot with higher sales, but its Hot Wheels, Fisher-Price and American Girl brands again suffered year-over-year sales declines.
Under the guidance of Ynon Kreiz, who was named chief executive in April, Mattel is undergoing a restructuring effort to slash expenses, bolster sales and end losses. The company in July said it was eliminating more than 2,200 jobs as part of a $650-million cost-cutting plan announced last year.
“We are on track with the execution of our strategy and have made meaningful progress toward restoring profitability,” Kreiz said in a statement Thursday.
“In the quarter, we achieved operating income of $122 million, up 41% versus the same period last year, which is the first time in eight quarters that we have posted year-over-year growth.”
Mattel posted net income of $6.3 million, or two cents a share, compared with a $603.3-million loss a year earlier that included a major tax-related charge.
After adjustments for restructuring charges, severance costs and other items, net income in the quarter ended Sept. 30 was 18 cents a share, which fell just short of analysts’ average forecast of 20 cents, according to FactSet.
Mattel’s quarterly sales of $1.44 billion also missed analysts’ estimate of nearly $1.5 billion. Mattel’s sales fell 6% from a year earlier when adjusted for currency f luctuations, which the company blamed partly on the liquidation of retailer Toys R Us earlier this year.
Hasbro Inc., Mattel’s primary rival, earlier this week also cited the loss of Toys R Us for a 12% drop in its thirdquarter sales. Both companies are working to find enough alternative retailers to make up for the loss of Toys R Us’ outlets.
Mattel said its international sales tumbled 14% from a year earlier after currency adjustments, driven mainly by lower sales in China and Europe.
But Mattel said its North American sales, led by Barbie, rose 4% despite the Toys R Us-related problems, which apparently cheered investors.
Mattel’s results were announced after regular stockmarket trading, during which Mattel’s stock gained 3% to $13.84 a share. The stock then jumped an additional 7.7% to $14.90 a share in after-hours trading.
Sales of Barbie products rose 17% worldwide to $374.7 million in the quarter. But sales of Hot Wheels toys fell 3% from a year earlier, sales of Fisher-Price and Thomas & Friends brands fell 10% and American Girl sales tumbled 31%. All the sales changes were adjusted for currency fluctuations.