- Strong dollar continues to weigh on overseas revenue
- Company reports first quarter without Disney licenses
Mattel Inc. fell after posting a larger first-quarter loss than analysts estimated on weak sales from its flagship Barbie doll, suggesting its nascent turnaround had stalled.
Excluding some items, the loss was 13 cents a share in the quarter, El Segundo, California-based Mattel said in a statement Wednesday after the market closed. Analysts had estimated a loss of 7 cents a share on average, according to data compiled by Bloomberg.
Mattel, the world’s biggest toymaker, thrilled investors in February when it reported a better-than-expected fourth quarter after changes by President Richard Dickson and Chief Executive Officer Chris Sinclair took hold. Barbie was the catalyst then as sales rose for the company’s biggest brand for the first time in more than two years. But that growth stalled in the period ended March 31, with Barbie revenue declining 3 percent.
The stock fell as much as 9.4 percent to $29.95 on Thursday, the biggest intraday drop since January 2015. Through Wednesday’s close, the shares had advanced 22 percent this year.
The strong dollar, which reduces the value of sales generated outside the U.S., weighed on Mattel’s results. Revenue declined 5.8 percent to $869.4 million, but when currency changes are taken into account, sales fell only 1 percent. The company said it expects the hit from foreign-exchange rates to ease in the second half of the year.
Sales for the rest of 2016 are expected to be similar to the first quarter, with revenue being little changed, excluding currency effects, the company said.
Dickson oversaw the Barbie brand during a previous stint at Mattel and he has focused on it since his return in 2014. His main critique is that 57-year-old doll has lost touch with today’s girls and moms. To fix that, the company unveiled a line with wider hips and more diversity.
Mattel also pushed the brand into technology with Hello Barbie, which uses artificial intelligence and cloud computing to create an experience similar to Apple Inc.’s Siri software. While the doll garnered plenty of buzz, it didn’t sell well amid complaints that it had trouble charging and connecting to the Web.
The company also came into 2016 having to overcome the loss of licenses for Walt Disney Inc.’s Princess and Frozen products to rival Hasbro Inc. Last quarter, that meant a reduction in sales of about $100 million, Sinclair said in an interview. Mattel used gains at its Fisher-Price and Hot Wheels brands to help fill the void, he said.
“We thought we could fill the gap, and we essentially did,” Sinclair said. “Sales execution was good.”