Barbie still sells: Mattel shares surge on 4Q profit, strong Barbie sales

Marco Green
February 11, 2019

In terms of its segments, Mattel Power Brands net sales decreased 6% to $1.2 billion, or 3% in constant currency. Sales from Barbie and Hot Wheels offset some of the losses, as the two segments increased by 12% and 9%, respectively.

Emerging Brands net sales increased 5% to $119.0 million.

"Restoring profitability for the company this year has been the core focus", chief executive officer Ynon Kreiz told Reuters, adding that he expects Mattel to exceed its cost-saving target.

The company also benefited from its plans to streamline its operations, with costs falling 27 percent to $814.7 million (£628 million) in the quarter. Note that this is the first gross margin improvement for each of the fourth quarter and full year since 2013. However, the toy company also decreased its advertising and promotion expenses by 4.6% in 2018, compared to 2017.

While every major US toy maker scrambled to find new avenues to sell toys after the sudden liquidation of the world's largest toy retailer, Hasbro's reliance on toys based on movie franchises compounded its struggles.

The company was said to be slashing 2,200 jobs, which makes up approximately 22% of its global non-manufacturing workforce in July past year.

"We were not, however, able to recapture as much of the Toys "R" Us business during the holiday period as we anticipated as the effect of its liquidated inventory in the market was more impactful than we and industry experts expected".

As for Mattel's Toy Box brands, including its Owned Brands and Partner Brands, gross sales fell 21% to US$519 million, primarily due to lower sales of MEGA and CARS products, and partially offset by initial sales of Jurassic World products.

The toy industry was a study in contrast in Friday's pre-market trade as Hasbro Inc's stock (NASDAQ:HAS) tumbled after a disappointing quarter due to the collapse of Toys "R" Us while rival Mattel Inc shares (NASDAQ:MAT) rocketed after reporting a robust fourth-quarter. Among all the achievements in 2018, I would like to applaud our team for regaining the #1 toy company position globally in a year full of challenges and headwinds. "This is a great moment to celebrate, before we go back and continue the hard work of implementing our multi-year turnaround". "Looking forward, we have ample opportunities to improve our financial performance across the board as our business strategy continues to gain traction in the marketplace".

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