Los Angeles Business Journal

Acquisition Costs, Lower Sales Hurt Mattel’s Quarter

By Deborah Crowe Monday, April 16, 2012

Shares of Mattel Inc. fell 9 percent Monday morning after the toymaker said that its first-quarter earnings fell 53 percent, largely due to acquisition costs and lower sales for Barbie and Hot Wheels products.

The El Segundo company reported net income of $7.8 million (2 cents a share), compared with $16.6 million (5 cents) in the same period a year earlier. Revenue fell 3 percent to $928 million. Analysts surveyed by Thomson Reuters on average expected revenue of more than $988 million.

The results were affected by costs related to the $680 million acquisition of HIT Entertainment, owner of the Thomas the Tank Engine and Bob the Builder franchises. Excluding those costs, adjusted earnings were 6 cents, compared with the Wall Street consensus for adjusted profit of 7 cents.

Worldwide sales for Barbie fell 6 percent, while sales of other girls' brands rose 22 percent. American Girl sales were up 4 percent. Sales in the unit that includes Hot Wheels and Matchbox were down 6 percent. Sales were flat at Fisher Price, which makes pre-school toys such as Power Wheels.

"The first quarter played out much as we had anticipated," said Chief Executive Bryan Stockton in a statement. "That said, as is often the case this time of year, we have work to do in certain areas across our portfolio of brands, countries and customers as we prepare to successfully execute the all-important holiday season."

Mattel’s directors declared a second-quarter cash dividend of 31 cents share, payable June 15 to stockholders of record on May 23.

Shares were down $3.06, or 9 percent to $31.07 in midday trading on the Nasdaq.