Mattel's Profit Misses Analysts' Estimates on Fisher-Price Toys
Net income rose 23 percent to $283.3 million, or 77 cents a share, the El Segundo, California-based company said today in a statement. Profit excluding a tax benefit was 72 cents a share. Analysts predicted 75 cents, the average of 12 estimates.
Fisher-Price revenue declined because the company delayed marketing and some shipping compared with a year ago, Chief Executive Officer Robert Eckert said on a conference call with analysts. U.S. retailers have pushed back orders in anticipation of consumers waiting longer to shop during the holiday season, Eckert said.
“Our shipments from retailers in the States were a bit soft late in the quarter,” Eckert said. “From our supply side standpoint, we are still struggling a bit with a few lines, mostly in Fisher-Price.”
Mattel dropped $1.55 to $22.45 at 4 p.m. New York time in Nasdaq Stock Market trading, the most since July. The stock has gained 12 percent this year.
Global sales of the Fisher-Price brand fell 5 percent after gaining the previous two quarters, as a decline in Power Wheels riding vehicles wiped out increases in Sing-A-Ma-Jigs dolls. Drew Crum, an analyst for Stifel Nicolaus & Co. in Cleveland, Ohio, predicted an increase of 6 percent for that unit.
The introduction of toys tied to the “Toy Story 3” movie and World Wrestling Entertainment have helped sales rebound this year after plummeting during the recession. Mattel’s third- quarter revenue rose 2.3 percent to $1.83 billion, a fourth straight gain that includes unfavorable currency swings of 3 percentage points. Analysts projected $1.94 billion on average.
Fisher-Price caused Mattel’s revenue to miss estimates, Crum, who recommends buying the shares, wrote in a note to clients.
The company recalled almost 11 million toys under its Fisher-Price brand on Sept. 30 after reports of children being cut or choked. The recall probably lowered earnings by 1 cent a share in the third quarter, the company said at the time in a filing with the U.S. Securities and Exchange Commission.
Mattel has been expanding to international markets under Eckert. Revenue from outside the U.S. made up about 47 percent of 2009 sales, a jump from 30 percent a decade ago.
Net income was $229.8 million, or 63 cents a share, in last year’s third quarter.
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