Shares of Mattel Inc. MAT tanked almost 9% in afterhours trading yesterday after the company posted a wider-than-expected loss for the first quarter of 2016.
Earnings & Revenue Discussion
Mattel’s adjusted loss per share of 13 cents was wider than both the Zacks Consensus Estimate and the year-ago quarter figure of 8 cents.
Adjusted loss excludes intangible asset amortization expense related to the Mega Brands, Fuhu and Sproutling; a loss due to currency devaluation in Venezuela; and severance expenses.
Revenues of $869.4 million slipped 2% year over year in constant currency but beat the consensus mark of $855 million by 1.7%. Sales declined 6% year over year including the impact of foreign currency.
Quarter Highlights
Gross sales fell 6% year over year due to a decline at Mattel Girls & Boys Brands and American Girl Brands. On a constant currency basis, gross sales were down 1%.
Gross sales of North America (including the U.S., Canada and American Girl) were down 2%, while that in the International region tumbled 11% mainly due to currency headwinds. However, on a constant currency basis, gross sales in both the North America and International region dipped 1% year over year.
Adjusted operating loss was $36 million, wider than the year-ago loss of $14.6 million, primarily due to lower revenues.
Segment Details
The company reports results under four segments, namely Mattel Girls & Boys Brands, Fisher-Price Brands, American Girl Brands, and Construction and Arts & Crafts Brands.
On a constant currency basis, worldwide gross sales at Mattel Girls & Boys Brands declined 8% to $527.9 million year over year on the back of a 58% plunge in the Other Girls brand. Barbie sales in constant currency remained flat. These were partly offset by a 9% increase in the Wheels category and 36% growth in the Entertainment business.
Gross sales at Fisher-Price Brands, which includes Fisher-Price Core, Fisher-Price Friends and Power Wheels, climbed 9% year over year to $272.6 million in constant currency.
Gross sales at American Girl Brands were $93.3 million, down 11% from the year-ago period on a constant currency basis.
Gross sales at Construction and Arts & Crafts Brands, which includes the Mega Bloks and RoseArt brands, were $61.9 million, up 78% from first-quarter 2015 in constant currency.
Second-Quarter 2016 Guidance
Mattel expects gross sales to more or less flat sequentially on a constant currency basis. The gross margin rate is also expected to be roughly flat as the first quarter, with supply chains efficiencies and cost savings partially offsetting foreign exchange headwinds.