Mattel Shares Racing Higher After Big Earnings Beat (NASDAQ:MAT)

Lloyd Doyle
February 11, 2019

Mattel delivered a fourth-quarter profit of $14.9 million, as compared with a loss in the year-ago period, on revenues of $1.52 billion.

Mattel has revealed its fourth quarter financial results, in which Barbie and Hot Wheels were by far the company's strongest brands with highest full year gross sales.

Barbie ended the year with its highest gross sales in five years, Mattel said, highlighting the company's success in turning around the iconic brand by launching dolls with different skin tones, adding plus-sized and hijab-wearing models and introducing new science kits to make the dolls more educational. Refinitiv analysts projected earnings loss of United States dollars 16 cents per share on revenue of USD 1.44 Billion.

Lower inventory levels at European retailers was almost as impactful as Toys "R" Us' liquidation to Hasbro's overall business, Chief Financial officer Deborah Thomas said, adding that the toy and games market in Europe was also shrinking.

Toymaker Hasbro Inc missed estimates for quarterly profit on Friday as the absence of a major Disney movie release compounded its struggles to recover sales lost from the collapse of retailer Toys "R" Us, sending its shares down 10 percent. Barbie sales rose 12% and toys sales from the Hot Wheels brand increased by 9%.

The company reported a full year net sales of US$4.51 billion and fourth quarter net sales of US$1.52 billion. In addition, Mattel faced a negative 6% impact from the Toys "R" Us liquidation and a negative 2% impact from the slowdown in its China business.

Overall U.S. toy retail sales fell 2 percent in 2018, after four straight years of growth, according to market research firm NPD Group.

Ynon Kreiz, Chairman and Chief Executive Officer of Mattel, said: "Our fourth quarter results demonstrate meaningful progress in executing our strategy and significant improvement over previous year".

As for Mattel's Toy Box brands, including its Owned Brands and Partner Brands, gross sales fell 21% to US$519 million, primarily due to lower sales of MEGA and CARS products, and partially offset by initial sales of Jurassic World products. Among all the achievements in 2018, I would like to applaud our team for regaining the #1 toy company position globally in a year full of challenges and headwinds. "This is a great moment to celebrate, before we go back and continue the hard work of implementing our multi-year turnaround", Kreiz said.

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