Mattel shares hit after losses widen

Mattel took a hit on Friday after the toymaker behind Barbie and American Girl said its losses widened and sales came in shy of forecasts in the first quarter.

Its shares tumbled 13.6 per cent to $21.79, taking its year-to-date losses to 20.9 per cent, after it said its net loss widened to $113.2m, or 33 cents a share, in the three months ended in March. That compared with $73m, or 21 cents a share, in the year-ago period. Adjusting for one-time items a loss of 32 cents was larger than the 18 cents analysts had forecast.

Mattel said net sales fell 15 per cent to $735.6m, compared with Wall Street’s expectations of $790.5m. Sales in North America decreased 23 per cent from a year ago, and international sales fell 2 per cent.

Barbie sales had begun to recover last year as the company had introduced three new body types — tall, curvy and petite — in an attempt to broaden appeal. But the results showed that demand for the Barbie brand had slipped again, with gross sales down 13 per cent compared with a year ago, their second consecutive quarter of decline.

Sales at Fisher-Price, Mattel Girls & Boys, which include the Barbie brand, and American Girl also declined in the first quarter.

“Our [first quarter] results were below our expectations due to the retail inventory overhang coming out of the holiday period, but we remain encouraged by strong performance at retail for our key core brands, including Barbie, Hot Wheels and Fisher-Price as well as sustained momentum in high-growth markets like China,” said Margo Georgiadis, Mattel’s chief executive.

She added that the company had worked through most of the overhang and was looking forward to the release of Disney’s Cars 3 in the second quarter.

Meanwhile, Wall Street equities posted their first weekly gain in three as investors once again turned bullish on US fiscal policy that overshadowed a decline in oil prices.

The S&P 500 rose 0.9 per cent since the end of last week at 2,348.69. The Dow Jones Industrial Average climbed 0.5 per cent on the week to 20,547.76 and the Nasdaq Composite jumped 1.8 per cent to 5,910.52.

This week’s gains came despite a sharp fall in the price of oil, which knocked the energy sector down by 2.1 per cent.

Stocks have been lifted by a renewal in hopes that the Trump administration still plans to tackle tax reform as soon as it can, despite congressional setbacks in its initial attempt to repeal and replace Obamacare.

Still, first-quarter earnings results have been mixed overall, with the big US banks broadly posting upbeat quarters but other notable large companies such as IBM missing estimates.

Peter Cecchini, head market strategist at Cantor Fitzgerald, noted results thus far “continue to paint a mixed picture on the health of the economy”, something that had been echoed in muddy economic data for the first quarter.