- Headwinds from strong dollar accelerated during third quarter
- CEO says turnaround on track, helped by cost reductions
Mattel Inc. posted third-quarter profit that trailed analysts’ estimates as Barbie sales continued their long decline, a sign that the turnaround plan at the world’s largest toymaker hasn’t gained enough traction.
Profit was 71 cents a share, excluding some items, the El Segundo, California-based company said in a statement Thursday. That trailed analysts’ 79-cent average estimate. Revenue fell 11 percent to $1.79 billion, missing analysts’ $1.89 billion average projection.
Mattel has been struggling to revive sales of Barbie, its largest brand, amid increased competition from other dolls and girl-oriented toys such as the Lego Friends line. Barbie’s sales fell 14 percent to $302 million in the quarter. Excluding changes in currency exchange rates, the decline would have been 4 percent. The company, which replaced Chief Executive Officer Bryan Stockton with board member Christopher Sinclair earlier this year, also will lose the licenses for Disney Princess and Frozen to rival Hasbro Inc. next year, leaving huge holes in its lineup.
The stock fell 2.4 percent to $22 at 5:52 p.m. in late trading in New York. The shares had declined 27 percent this year through Thursday’s close, compared with a drop of 1.7 percent for the Standard & Poor’s 500 Index.
Sinclair said in an interview that Mattel’s turnaround is on track, noting that the company expects to meet forecasts that sales will be little changed this year, excluding changes in currency, and that gross margin will be 50 percent.
The strong dollar has continued to hurt the company’s overseas results, and the effects were worse than expected last quarter, reducing earnings by 20 cents a share, he said. Revenue took a $150 million hit, bringing the year’s total to $300 million. Mattel expects the impact to fade this quarter.
The company has cut more costs than expected and now plans to reduce expenses by $300 million by the end of next year, the high end of its projections, Sinclair said.
“We’re where we’d thought we’d be, and making good progress,” Sinclair said. “Some parts are a little harder to get done, but on balance it’s pretty solid.”