Mattel Earnings Down 11 Percent

NORTH AMERICA–Mattel, the world’s No. 29 largest licensor, reported that full year net sales in 2017 were down 11 percent as reported and in constant currency, and full year gross sales were down 9 percent as reported and down 10 percent in constant currency.

April 6, 2018

The toy company continued to see declines following the Toys ‘R’ Us bankruptcy filing.

In North America, net sales decreased by 17 percent, as reported and in constant currency, compared to the year prior. Gross sales also decreased by 17 percent in the region, which was primarily driven by lower sales as a result of tighter retail inventory management, underperforming brands and the Toys ‘R’ Us bankruptcy filing.

Internationally, Mattel reported that its net sales remained flat as reported and decreased by 1 percent in constant currency. However, gross sales increased by 2 percent as reported, and were flat in constant currency. The decline in reported and adjusted gross margin was primarily driven by inventory management efforts, unfavorable product mix and higher freight and logistics expenses.

For Mattel’s girls’ and

boys’ brands, worldwide gross sales were $3.1 billion, a decrease of 4 percent as reported and 5 percent in constant currency, compared to the year prior. Worldwide gross sales for the Barbie brand were down 2 percent as reported, which was primarily driven by a shift in the company’s DVD entertainment strategy. Worldwide sales for other girls’ brands were down 36 percent as reported, which was driven by declines in Monster High and Ever After High and offset by initial sales of Enchantimals. Meanwhile, worldwide sales for the wheels category were down 4 percent as reported and were primarily driven by declines in Hot Wheels and Matchbox.

Additionally, worldwide gross sales for the company’s entertainment business were up 12 percent as reported, which was driven by increases in

Cars

sales and offset by declines in “Minecraft” and DC Comics products.

Meanwhile, worldwide sales for the American Girl brand was $451.5 million, down 21 percent as reported compared to the year prior. This was primarily driven by lower sales across channels.

Mattel’s construction and arts and crafts brands also reported a decrease of 29 percent to $269.5 million. This was primarily driven by declines in Mega Bloks licensed and preschool products.

Finally, Fisher-Price reported worldwide gross sales of $1.7 billion, down 11 percent as reported compared to the year prior. According to the company, this was primarily driven by declines in infant and preschool products as well as “Thomas & Friends.”

"We have taken aggressive action to enter 2018 with a clean slate so that we can reset our economic model and rapidly improve profitability," says Margo Georgiadis, chief executive officer, Mattel. "We are optimistic about stabilizing revenue in 2018 anchored by our key power brands, entertainment partnerships and exciting new launches. We continue to gain momentum toward the medium-term goals we shared at our June Investor Day."