Mattel Misses on Earnings, Sales; Down Y/Y - Analyst Blog

By Zacks Equity Research,

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Mattel Inc. ( MAT ) posted dismal fourth quarter and full year 2013 results. Adjusted earnings of $1.07 per share were down 4.5% year over year. The figure also missed the Zacks Consensus Estimate of $1.20 by 10.8%. The downside reflects weak sales and higher advertising and promotion expenses.     
During the quarter, net sales declined 6.3% year over year to $2.11 billion, primarily reflecting poor performance in the domestic market. Sales of brands including Barbie and Fisher-Price dropped during the holiday season. Sales also missed the Zacks Consensus Estimate of $2.38 billion by 11.0%.

Quarter Highlights

Gross sales from North America (including the U.S., Canada and American Girl) were down 10.0% year over year compared to an increase of 3.0% in the previous quarter due to weakness in the U.S. International gross sales were flat year over year compared to an increase of 9.0% in the previous quarter.

Mattel's product segments comprise Mattel Girls & Boys Brands, Fisher-Price Brands and American Girl Brands.

Worldwide gross sales at Mattel Girls & Boys Brands declined 4.0% year over year to $1.35 billion. However, it increased 8% during the previous quarter. Worldwide gross sales of the Barbie brand declined 13.0%, whereas gross sales of the Other Girls Brands surged 12.0%, thanks to Disney Princess. Gross sales of the Wheels category declined 11.0% while the Entertainment business plunged 6.0% due to lower sales of Radica and Games.

After remaining flat year over year in the previous quarter, sales at Fisher-Price Brands, which includes Fisher-Price Core, Fisher-Price Friends and Power Wheels brands, declined 13.0% year over year to $647.4 million.

Gross sales at American Girl Brands were up 3.0% year over year to $331.6 million driven by Saige, the 2013 Girl of the Year. However, it was far below growth of 20.0% in the previous quarter.

Gross margin was up 20 basis points (bps) to 54.5%, driven by decline in cost of sales. Operating margin remained flat year over year at 22.7%.

Full Year 2013 Highlights

Adjusted earnings per share in full year 2013 went up 4.5% year over year to $2.58, but missed the Zacks Consensus Estimate of $2.74 by 5.8%. Revenues were $6.48 billion, up 1.0% year over year but missed the Zacks Consensus Estimate of $6.73 billion by 3.6%.

Share Buyback Activity & Dividend

During the fourth quarter, Mattel repurchased 2.0 million shares worth $83.0 million. Also, the board declared a cash dividend of 38 cents per share that that translates into an annualized dividend of $1.52 per share and represents an increase of 6.0% to year over year.

Our Take

Mattel's top and bottom line failed to beat our expectation during the reported quarter on weak consumer spending. The sluggish performance reflects that consumer spending uncertainty still lingers amid sluggish economic growth in the U.S as customers curb their non-essential purchases.

The company presently has a Zacks Rank #4 (Sell). Other toy makers such as, Glu Mobile, Inc. ( GLUU ), Hasbro Inc. ( HAS ) and LeapFrog Enterprises Inc. ( LF ), are slated to report quarterly earnings soon. While Hasbro will report on Feb 10, Glu Mobile and LeapFrog will likely report on Feb 5 and Feb 12, respectively.

GLU MOBILE INC (GLUU): Free Stock Analysis Report

HASBRO INC (HAS): Free Stock Analysis Report

LEAPFROG ENTRPS (LF): Free Stock Analysis Report

MATTEL INC (MAT): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: GLUU , HAS , LF , MAT

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