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Mattel's losses rise in Q1

By Staff -- Gifts and Dec, 4/17/2009 7:42:00 AM

EL SEGUNDO, Calif.—Mattel today reported a $51 million net loss for 2009’s first quarter following a 15 percent drop in worldwide sales.

The loss, worth 14 cents per share, rose from the $46.6 million, 13 cents per share loss the toymaker tallied in the corresponding quarter of 2008. Its operating loss in 2009’s first frame was $55.2 million, up from $36.5 million in 2008’s Q1.

“This quarter's results met our expectations, with revenues negatively impacted by foreign exchange rates and retailer inventory reductions,” said Robert Eckert, Mattel’s chairman and CEO. “We've made good progress on several strategically important fronts, and will continue to manage costs and expenses in light of expected revenue challenges.”

During the quarter, Mattel’s gross margin increased 80 basis points of net sales while SG&A increased 450 basis points of net sales. Margins were helped by an increase in wholesale prices for some of its products. The company also entered 2009 with nearly 1,000 fewer employees than it had in the comparable period.

For the quarter, net sales sank 15 percent from 2008’s first quarter to $785.6 million, including unfavorable changes in currency exchange rates of 7 percentage points. On a regional basis, gross sales slipped 6 percent in the U.S. and fell 23 percent in international markets, including unfavorable changes in currency exchange rates of 13 percentage points.

Worldwide gross sales for the company’s core Mattel Girls & Boys Brands business unit were $504.0 million, down 15 percent versus a year ago. Included in that figure are a 5 percent drop in worldwide gross sales for the Barbie brand, where a double-digit domestic sales increase was offset by international declines blamed primarily on foreign exchange rates; a 27 percent drop in sales of the company’s “Other Girls Brands,” propelled downward by declines for Polly Pocket and High School Musical doll lines; a 14 percent drop for Mattel’s Wheels business, home to Hot Wheels, Matchbox and Tyco R/C; and a 21 percent fall for the Entertainment business, which includes Radica and the and Games and Puzzles business.

First quarter worldwide gross sales for the Fisher-Price Brands business unit, which includes the Fisher-Price Core, Fisher-Price Friends and Power Wheels brands, were off 17 percent to $283.7 million, primarily due to declines in Fisher-Price Core products.

First quarter gross sales for the American Girl Brands business unit, which offers American Girl branded products directly to consumers, were $66.4 million, down 4 percent versus last year, reflecting the later timing of Easter.

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