Mattel (NASDAQ:MAT), the world’s largest toymaker, swung to a second-quarter loss as sales fell for the seventh straight quarter on weak international demand for its Barbie dolls. Shares retreated in morning trading.
Net loss was $11.4 million, or $0.03 per share, in the April-to-June quarter, compared with a profit of $28.3 million, or $0.08 per share, a year earlier, the El Segundo, California-based company said in a statement late yesterday.
Profit amounted to 1 cent a share in the period, excluding some items. That beat analysts’ predictions for a 4-cent loss, according to data compiled by Capital IQ.
Net sales fell 7 percent to $988.2 million, lagging behind the Wall Street consensus of $991.9 million. Sales for Barbie dropped 11 percent but are up slightly for the year.
Barbie’s weak performance underscores the deep challenges facing new Mattel chief executive christopher Sinclair as he looks to right the world’s largest toy maker by sales. Barbie is Mattel’s largest brand and a big driver of profits, but its long slump has cost it shelf space at retailers that Mattel will have to work hard to earn back.
“Although we are still early in our turnaround effort, I believe we are taking all the right steps to be more competitive in the growing global toy industry,” Sinclair said in the statement.
Shares declined 4.8 percent to $23.95 at 10:37 a.m. in New York, expanding this year’s drop to 22 percent.
Worldwide sales for the company’s infant and toddler brand Fisher-Price rose 9 percent, American Girl climbed 1 percent and Hot Wheels and Matchbox rose 26 percent.
Gross margin improved to 47.9 percent in the second quarter ended June 30 as costs fell 10 percent.
Mattel is on track to achieve the high end of its cost-cut target range of $250 million to $300 million by end of next year, Reuters cited CFO Kevin Farr as saying on a post-earnings call.
The company also said it had renewed its partnership with Walt Disney Co for the Toy Story films, gaining global rights for toys based on the fourth installment of the franchise due in 2017.
The company said earlier this year that it would refresh its line of Barbies in 2016. It also announced plans for a fall launch of the first-ever line of superhero action figures for girls, featuring characters such as Superwoman and Wonder Woman.