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Mattel's (MAT) Shares Down on Q4 Earnings and Sales Miss
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Mattel, Inc. (MAT - Free Report) reported lower-than-expected results in the fourth quarter of 2017.
Adjusted loss of 72 cents per share compared unfavorably with the Zacks Consensus Estimate of earnings of 17 cents and the prior-year quarter’s 52 cents.
Shares lost more than 6% in after-hours trading following the release.
The company faced a challenging fourth quarter due to significant hurdles from inventory retailers, mixed brand performance and the Toys ‘R’ Us bankruptcy. All these factors have collectively affected earnings in the quarter.
Notably, Mattel’s shares have lost 40.7% in the past year, underperforming the broader industry’s gain of 56.5%.
Let’s take a closer look at the numbers.
Sales Discussion
Net sales of $1.61 billion missed the consensus estimate of $1.75 billion by 8% and declined 12% year over year as reported and 14% at constant currency.
Worldwide gross sales were down 8% year over year as reported and 1% at constant currency. Gross sales in North America (including the United States, Canada and American Girl) declined 16% both as reported and at constant currency mainly due to lower sales as a result of Toys "R" Us filing for bankruptcy and tighter retailer inventory management.
Meanwhile, in the International region, gross sales were up 4% as reported (down 1% on a constant currency basis), primarily driven by strong performances by brands like LatAm, Cars 3, Fisher-Price and Barbie.
Brand-Wise Worldwide Sales
Mattel, through its subsidiaries, sells a broad range of toy products that are grouped into four major categories — Mattel Girls & Boys Brands, Fisher-Price Brands, American Girl Brands, and Construction and Arts & Crafts Brands.
As reported, worldwide gross sales at Mattel Girls & Boys Brands increased 1% to $1.1 billion year over year (down 2% on a constant-currency basis). Barbie brand saw a 9% hike in the as reported (up 6% in constant currency), as a result of shipping aligning with strong POS. The Other Girls brands’ gross sales decreased 35% as reported and 36% at constant currency due to declines in Monster High and DC Super Hero Girls, partially offset by initial sales of Enchantimals.
Revenues at the Wheels category dropped 7% in the quarter as reported (down 10% at constant currency) due to declines in Hot Wheels. On the contrary, the Entertainment business witnessed a 21% rise as reported (up 18% in constant currency) backed by increases in CARS sales, offset by declines in Dinotrux and Minecraft.
Gross sales at Fisher-PriceBrands, which includes the Fisher-Price Core, Fisher-Price Friends and Power Wheels brands, slipped 12% year over year to $533.8 million as reported (down 14% at constant currency). Declines in Thomas & Friends and infant products hampered the results.
Gross sales at American Girl Brands were $217.3 million, down 23% from the year-ago quarter as reported and on a constant-currency basis primarily due to lower sales across channels.
Gross sales at Construction and Arts & Crafts Brands, which includes the Mega Bloks and RoseArt brands, were $93.5 million, down 25% from fourth-quarter 2016 as reported (down 26% at constant currency). The decline was primarily due to decreased sales of MEGA BLOKS licensed and Preschool products.
Gross margin of 30.7% declined 43% from the year-ago quarter as reported and 44% at constant currency.
Operating loss as a percentage of net sales widened 196% year over year as reported to 15.7%. At constant currency, it widened 195%.
Net loss in the quarter was $281.3 million, indicating a year-over-year decline of 262% as reported.
Balance Sheet
As of Dec 31, 2017, the company’s cash and equivalents were $1.1 billion compared with $869.5 million as of Dec 31, 2016. Total inventories increased 1.2%.
The company’s long-term debt was $2.9 billion as of Dec 31, 2017, up from $2.1 billion as of Dec 31, 2016.
Shareholder’s equity was $1.3 billion and the debt-to-total capital ratio was 71.3% in the year ending Dec 31, 2017.
2017 Results
Net sales in 2017 fell 11% year over year in both reported and constant currency basis to $4.9 billion. Gross sales were down 9% as reported and 10% at constant currency year over year. Adjusted operating loss in the year was $167.1 million and adjusted loss per share was $1.08 in 2017.
Nintendo, Las Vegas Sands and Wynn Resorts’ 2018 earnings are projected to grow 240.5%, 9.5% and 39.6%, respectively.
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Mattel's (MAT) Shares Down on Q4 Earnings and Sales Miss
Mattel, Inc. (MAT - Free Report) reported lower-than-expected results in the fourth quarter of 2017.
Adjusted loss of 72 cents per share compared unfavorably with the Zacks Consensus Estimate of earnings of 17 cents and the prior-year quarter’s 52 cents.
Shares lost more than 6% in after-hours trading following the release.
The company faced a challenging fourth quarter due to significant hurdles from inventory retailers, mixed brand performance and the Toys ‘R’ Us bankruptcy. All these factors have collectively affected earnings in the quarter.
Notably, Mattel’s shares have lost 40.7% in the past year, underperforming the broader industry’s gain of 56.5%.
Let’s take a closer look at the numbers.
Sales Discussion
Net sales of $1.61 billion missed the consensus estimate of $1.75 billion by 8% and declined 12% year over year as reported and 14% at constant currency.
Worldwide gross sales were down 8% year over year as reported and 1% at constant currency. Gross sales in North America (including the United States, Canada and American Girl) declined 16% both as reported and at constant currency mainly due to lower sales as a result of Toys "R" Us filing for bankruptcy and tighter retailer inventory management.
Meanwhile, in the International region, gross sales were up 4% as reported (down 1% on a constant currency basis), primarily driven by strong performances by brands like LatAm, Cars 3, Fisher-Price and Barbie.
Brand-Wise Worldwide Sales
Mattel, through its subsidiaries, sells a broad range of toy products that are grouped into four major categories — Mattel Girls & Boys Brands, Fisher-Price Brands, American Girl Brands, and Construction and Arts & Crafts Brands.
As reported, worldwide gross sales at Mattel Girls & Boys Brands increased 1% to $1.1 billion year over year (down 2% on a constant-currency basis). Barbie brand saw a 9% hike in the as reported (up 6% in constant currency), as a result of shipping aligning with strong POS. The Other Girls brands’ gross sales decreased 35% as reported and 36% at constant currency due to declines in Monster High and DC Super Hero Girls, partially offset by initial sales of Enchantimals.
Revenues at the Wheels category dropped 7% in the quarter as reported (down 10% at constant currency) due to declines in Hot Wheels. On the contrary, the Entertainment business witnessed a 21% rise as reported (up 18% in constant currency) backed by increases in CARS sales, offset by declines in Dinotrux and Minecraft.
Gross sales at Fisher-Price Brands, which includes the Fisher-Price Core, Fisher-Price Friends and Power Wheels brands, slipped 12% year over year to $533.8 million as reported (down 14% at constant currency). Declines in Thomas & Friends and infant products hampered the results.
Gross sales at American Girl Brands were $217.3 million, down 23% from the year-ago quarter as reported and on a constant-currency basis primarily due to lower sales across channels.
Gross sales at Construction and Arts & Crafts Brands, which includes the Mega Bloks and RoseArt brands, were $93.5 million, down 25% from fourth-quarter 2016 as reported (down 26% at constant currency). The decline was primarily due to decreased sales of MEGA BLOKS licensed and Preschool products.
Mattel, Inc. Price, Consensus and EPS Surprise
Mattel, Inc. Price, Consensus and EPS Surprise | Mattel, Inc. Quote
Operating Results
Gross margin of 30.7% declined 43% from the year-ago quarter as reported and 44% at constant currency.
Operating loss as a percentage of net sales widened 196% year over year as reported to 15.7%. At constant currency, it widened 195%.
Net loss in the quarter was $281.3 million, indicating a year-over-year decline of 262% as reported.
Balance Sheet
As of Dec 31, 2017, the company’s cash and equivalents were $1.1 billion compared with $869.5 million as of Dec 31, 2016. Total inventories increased 1.2%.
The company’s long-term debt was $2.9 billion as of Dec 31, 2017, up from $2.1 billion as of Dec 31, 2016.
Shareholder’s equity was $1.3 billion and the debt-to-total capital ratio was 71.3% in the year ending Dec 31, 2017.
2017 Results
Net sales in 2017 fell 11% year over year in both reported and constant currency basis to $4.9 billion. Gross sales were down 9% as reported and 10% at constant currency year over year. Adjusted operating loss in the year was $167.1 million and adjusted loss per share was $1.08 in 2017.
Zacks Rank & Stocks to Consider
Mattel carries a Zacks Rank #5 (Strong Sell).
A few better-ranked stocks in the Consumer Discretionary sectorare Nintendo (NTDOY - Free Report) , Las Vegas Sands (LVS - Free Report) and Wynn Resorts (WYNN - Free Report) , all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nintendo, Las Vegas Sands and Wynn Resorts’ 2018 earnings are projected to grow 240.5%, 9.5% and 39.6%, respectively.
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks’ has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
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