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Mattel shares hit three-month low after Q2 results disappoint

Mattel shares hit three-month low after Q2 results disappoint

Mattel (NASDAQ:MAT) shares plunged in early deals Wednesday after the company reported a 24 per cent decline in second quarter net profit, hurt by an asset impairment charge, and as Fisher Price and Barbie sales fell. 

For the three months to June 30, the company reported net income of $73.3 million, or 21 cents per share, compared to a profit of $96.2 million, or 28 cents per share, a year ago. 

Net sales were $1.17 billion, up 1 per cent compared to last year, with no impact from changes in currency exchange rates. 

Analysts polled by Thomson Reuters had most recently forecast per-share earnings of 32 cents on revenue of $1.22 billion.

In the Mattel Girls and Boys brands category, total sales were $792.4 million, up 1 per cent from a year ago. In this unit, Barbie sales were down 12 per cent, while Wheels sales, which includes the Hot Wheels, Matchbox and Tyco brands, were down 6 per cent. Without Barbie, sales of Girls brands were up 23 per cent. 

Fisher-Price sales were $396.7 million, down 3 per cent from the same period a year ago, while the American Girl brand sales rose 14 per cent to $78.2 million, driven by strong sales of Saige, the 2013 Girl of the Year and Caroline, the company said. 

“While we delivered another quarter of sales growth and strong gross margins, lower profits in the second quarter reflect an asset impairment charge and strategic investments made to support consistent future growth," said chairman and CEO, Bryan G. Stockton, in the release Wednesday. The company didn't specify the amount of the asset impairment charge, or the strategic investments. 

"As we look to the second half of the year and the all-important holiday season, we are excited by the innovative product, entertainment and retail programs planned and we remain focused on leveraging our industry leading portfolio of strong brands, countries and customers.”

On a regional basis, North American sales decreased 2 per cent in the quarter, while international sales rose 4 per cent. Gross margin was flat at 51.3 per cent. 

The toy maker, which also declared a third quarter dividend of 36 cents per share Wednesday, also announced an increase to its share buyback program of $500 million. 

Shares of Mattel fell to a 3-month low of $43.55, down more than 6 per cent this morning. 

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Mattel Timeline

January 26 2017
February 02 2016

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