Spielwarenmesse: Mattel reports first quarter 2017 financial results

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Mattel reports first quarter 2017 financial results

21. April 2017 10:09 h:

First Quarter Highlights

  • Worldwide net sales and gross sales down 15% as reported and in constant currency.
  • Lower sales in North America and Europe, partially offset by strong performance in Asia Pacific (net sales and gross sales up 17% as reported), and continued momentum in Latin America (net sales down 1% and gross sales up 4% as reported).
  • POS remains strong across key core brands: Barbie®, Hot Wheels® and Fisher-Price®.2
  • Board declared a 2017 second quarter cash dividend of $0.38 per share, which is flat compared to the second quarter of 2016.

Mattel, Inc. yesterday reported first quarter 2017 financial results.

"Our Q1 results were below our expectations due to the retail inventory overhang coming out of the holiday period, but we remain encouraged by strong performance at retail for our key core brands, including Barbie, Hot Wheels and Fisher-Price as well as sustained momentum in high-growth markets like China," said Margo Georgiadis, CEO of Mattel. "We are confident we have worked through the majority of this overhang and look forward to a strong launch of Disney's Cars 3 theatrical release in the second quarter. While we have a lot of work to do to successfully position Mattel for the future, we see a clear runway to improving growth and profitability over time."

For the first quarter of 2017, net sales and gross sales were down 15% as reported and in constant currency versus the prior year's first quarter. Reported operating loss was $127.0 million, and adjusted operating loss was $122.1 million. Reported loss per share was $0.33, and adjusted loss per share was $0.32.

Financial Overview

For the first quarter, net sales in the North American Region decreased by 23% as reported and in constant currency, versus the prior year's first quarter; gross sales in the North American Region decreased by 24% as reported and in constant currency. In the International Region, net sales decreased by 2% as reported, and decreased by 1% in constant currency; gross sales in the International Region decreased by 2% as reported, and were flat in constant currency.

Gross margin for the quarter decreased 680 basis points, driven mainly by higher obsolescence expense, unfavorable impact of fixed cost absorption due to lower sales, unfavorable foreign currency and lower licensing income.

Reported other selling and administrative expenses decreased $18.7 million; adjusted other selling and administrative expenses for the quarter decreased $13.1 million, reflecting continuous cost improvement initiatives and favorable foreign exchange.

Reported operating loss for the quarter was $127.0 million, compared to the prior year's first quarter reported operating loss of $49.1 million. Adjusted operating loss for the quarter was $122.1 million, compared to the prior year's first quarter adjusted operating loss of $38.6 million.

For the quarter, net cash flows used for operating activities were approximately $310 million, an increase of approximately $221 million versus the prior year's first quarter, primarily driven by higher working capital usage and higher net loss.

Cash flows used for investing activities were approximately $45 million, a decrease of approximately $10 million versus the prior year's first quarter, primarily driven by a decrease in payments for acquisitions, partially offset by changes in foreign currency forward exchange contracts for the year.

For the quarter, cash flows used for financing activities and other were approximately $133 million, compared to approximately $149 million in the prior year's first quarter, primarily driven by lower proceeds from the exercise of stock options.

The Company's debt-to-total capital ratio as of March 31, 2017 was 51.1%.

Capital Deployment

The Board of Directors declared a 2017 second quarter cash dividend of $0.38 per share, which is flat compared to the second quarter of 2016. The dividend will be payable on June 9, 2017 to stockholders of record on May 19, 2017.

Sales by Brand

Mattel Girls and Boys Brands

For the first quarter, worldwide gross sales for Mattel Girls & Boys Brands were $441.1 million, down 16% as reported and in constant currency, versus the prior year's first quarter. Worldwide gross sales for the Barbie brand were down 13% as reported, and down 12% in constant currency, versus the prior year's first quarter. Worldwide gross sales for Other Girls brands were down 34% as reported and in constant currency, versus the prior year's first quarter. Worldwide gross sales for the Wheels category were up 4% as reported and in constant currency, versus the prior year's first quarter. Worldwide gross sales for the Entertainment business were down 27% as reported and in constant currency, versus the prior year's first quarter.

Gross sales for Mattel Girls & Boys Brands in the International Region were $238.4 million, down 2% as reported and down 1% in constant currency, versus the prior year's first quarter. Gross sales for Mattel Girls & Boys Brands in the North American Region were $202.7 million, down 29% as reported and in constant currency, versus the prior year's first quarter.

Fisher-Price Brands

For the first quarter, worldwide gross sales for Fisher-Price Brands, which includes the Fisher-Price Core, Fisher-Price Friends and Power Wheels® brands, were $246.9 million, down 9% as reported, and down 8% in constant currency, versus the prior year's first quarter.

Gross sales for Fisher-Price Brands in the International Region were $113.8 million, up 1% as reported and up 4% in constant currency, versus the prior year's first quarter. Gross sales for Fisher-Price Brands in the North American Region were $133.1 million, down 17% as reported and in constant currency, versus the prior year's first quarter.

American Girl Brands

For the first quarter, worldwide gross sales for American Girl Brands, which offers American Girl-branded products directly to consumers, were $82.2 million, down 12% as reported and in constant currency, versus the prior year's first quarter.

Construction and Arts & Crafts Brands

For the first quarter, worldwide gross sales for Construction and Arts & Crafts Brands, which includes the MEGA BLOKS and RoseArt brands, were $38.5 million, down 38% as reported and in constant currency, versus the prior year's first quarter.

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