Mattel driven to loss by low sales, higher costs

Source: Retail Exec

Date :21/04/2008 03:59:17

Mattel Inc., the largest U.S. toy company, said Monday that lower sales of its Fisher-Price products, legal expenses and higher costs led to a first-quarter loss.

The maker of Barbie dolls, Hot Wheels and Matchbox cars reported a first-quarter loss of $46.6 million, or 13 cents a share, compared with a year-earlier profit of $12 million, or three cents a share.

Analysts on average were expecting earnings of one cent per share.

Meanwhile, sales fell two percent to $919.3 million, below analysts' estimates of $932.5 million.

Profitability

Robert A. Eckert, chairman and chief executive said that the results were “not completely surprising” compared to last year’s strong first quarter.

"Although the first quarter was impacted by higher product costs and legal fees, we expect price increases effective in June to aid profitability in the latter half of the year," he said.

Wall Street analysts have said Mattel's margins should be pressured through the second quarter as the company grapples with higher testing and legal expenses stemming from last year's global recalls.

Popular brands

Mattel said gross sales fell eleven percent in the United States and increased eight percent internationally during the first quarter.

Global sales in its Fisher-Price unit fell 13 percent to $341.3 million while worldwide sales for the Barbie brand were flat, as higher international sales offset declines in the U.S.

Despite this, sales of the company's Hot Wheels, Matchbox and Tyco R/C brands gained 15 percent, led by the popular new Speed Racer toy line.

April 21, 2008

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