Tags: Mattel | Profit | Earnings | Toys

Mattel's Profit Falls 24 Percent as Barbie's Appeal Fades

Wednesday, 17 July 2013 07:22 AM

Mattel said Wednesday its second-quarter net income fell 24 percent, hurt by weak sales in North America and continued softness in Barbie sales, as well as an asset impairment charge.

Its shares slumped almost 5 percent in premarket trading.

Toy industry sales have been in slight decline all year, hurt by cautious consumer spending, a video game industry slump and increased demand for electronic gadgets like smartphones and tablets. And while Mattel, the largest U.S. toymaker and maker of Monster High dolls and Hot Wheels toys, usually outperforms its rivals, the latest results show it is not immune to industry-wide declines.

CEO Bryan Stockton said the results reflect an asset impairment charge as well as investments made to help the company grow in the future, including increasing its share repurchase program by $500 million.

In the April-to-June quarter, Mattel's net income dropped to $73.3 million, or 21 cents per share. That compares with $96.2 million, or 28 cents per share, a year ago.

Mattel didn't specify how large the impairment charge was or give a figure that excludes unusual items. Analysts expected earnings of 32 cents per share but typically exclude unusual items from the estimates. An impairment charge often reflects the reduced value of an asset.

Revenue for the El Segundo, Calif., company edged up to $1.17 billion from $1.16 billion as international sales grew. Still, this missed Wall Street's estimate of $1.22 billion.

North American sales fell 2 percent, while International sales rose 4 percent.

Sales of Mattel's Barbie franchise declined for the fourth straight quarter, falling 12 percent. Sales of the company's other girls brands climbed 23 percent, mostly due to the continued popularity of Monster High products.

One bright spot was Mattel's American Girl line, with sales up 14 percent. Sales of Fisher-Price branded products dropped 3 percent, while Hot Wheels sales dipped 1 percent.

Mattel Inc. said Wednesday that its board declared a third-quarter dividend of 36 cents. The dividend will be paid on Sept. 20 to shareholders of record on Aug. 28.

Mattel shares dropped $2.20, or 4.8 percent, to $44.13 in premarket trading. They are near the higher end of their 52-week range of $33.84 to $48.48.

A more complete picture of how the toy industry is doing will come when Mattel's smaller rival, Hasbro Inc., reports on July 22.

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Mattel Inc., the world's largest toymaker, reported a far weaker-than-expected profit as sales of Barbie dolls fell again, highlighting the iconic brand's struggle to stay relevant.
Wednesday, 17 July 2013 07:22 AM
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