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Bear of the Day: Mattel (MAT)

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Headquartered in El Segundo, CA, Mattel (MAT - Free Report)  - Research Report) is one of the world’s largest manufacturers of toys. Their portfolio includes Barbie, Hot Wheels, Monster High, American Girl, Thomas & Friends and Fisher-Price brands. They employ approximately 30,000 people in 40 countries and sell products in more than 150 countries.

Weak Results Lead to Falling Estimates

Mattel’s adjusted loss of 14 cents per share was worse than the Zacks Consensus Estimate of a loss of 8 cents. Also, revenues of $974.5 million while up 2% year over year missed our estimate.

While worldwide gross sales were up 1%, North American gross sales declined 2%. Worldwide sales for Mattel Girls & Boys Brands were up 10%, but Fischer-Price sales were down 3%, and American Girl doll sales declined 6%.

Estimates have also plunged after the report. Zacks Consensus Estimates for the current and the next year have fallen to $0.79 per share and $1.00 per share from $0.95 and $ 1.16 respectively before the results. The company has missed in three out of last four quarters, with an average negative quarterly surprise exceeding 47%.

Shares fell after the report and are now down over 39% year-to-date.

In June, the company announced that it is slashing its quarterly dividend to $0.15 per share from $0.38 per share earlier.

The Bottom Line

Mattel has seen weak sales for the past many quarters as they struggle with kids’ rising preference for videogames and smartphone applications.

Additionally, they are losing in competition with Hasbro (HAS) after Disney selected Hasbro for the Disney Princess and Frozen franchises. Mattel had previously held the license for those dolls.

Hasbro currently has a Zacks Rank #2 (Buy) and VGM Score of “A”.


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