Mattel Profit Falls Short of Estimates, Hurt by Toy Recalls
Mattel, the world's largest toy company, posted lower quarterly profit, missing Wall Street estimates, Monday on charges stemming from its recent global recalls of potentially harmful toys.
The maker of Barbie dolls and the T.M.X. Elmo said third-quarter profit fell to $236.8 million, or 61 cents a share, from $239 million, or 62 cents a share, a year earlier.
Analysts on average were expecting earnings of 70 cents a share, excluding special items, according to Reuters Estimates.
Excluding recall charges, Reuters Estimates estimated the company earned 68 cents a share.
Mattel recalled about 21 million toys earlier this year due to lead paint and hazards posed by small magnets. The company said the recalls resulted in a charge of about $40 million during the quarter.
"Despite the challenges the company faced during the third quarter, the business has performed fairly well, even with some supply chain disruptions that impacted sales during the quarter," Chief Executive Robert Eckert said in a statement.
"U.S. Barbie performance was soft and remains an area of focus," he said, "although a good portion of the decline was directly related to supply chain disruptions."
Sales climbed 3% to $1.84 billion. Analysts were expecting about $1.9 billion, according to Reuters Estimates.
Worldwide gross sales of Barbie, one of Mattel's key product lines, fell 4%.
Sales of Mattel's girls and boys brands rose 6%, while Fisher Price sales increased 1%. The company's Wheels business, which includes Hot Wheels and Matchbox toy cars, increased 9%.
"Early fall toy sales, according to our research, have been negatively impacted by consumer response to the well publicized recalls of Chinese toys and in particular Mattel/Fisher Price toys," Sterne Agee analyst Margaret Whitfield wrote in an Oct. 12 research note.
"The key Barbie products for the back half do not seem to be performing well at this early stage, which includes Island Princess and Barbie Girl, according to our research," wrote Whitfield, who has a "hold" rating on the stock.