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Q3 Results
The El Segundo, California-based company's third-quarter net income was $229.8 million or $0.63 per share, compared to $238.1 million or $0.65 per share in the year-ago quarter.
On average, 16 analysts polled by Thomson Reuters expected the company to post earnings of $0.63 per share. Analysts' estimates typically exclude special items.
Quarterly net sales totaled $1.79 billion, a decline of 8%, compared with the previous year's net sales of $1.95 billion, including unfavorable changes in currency exchange rates of 3 percentage points. Twelve Wall Street analysts had a consensus revenue estimate of $1.78 billion for the quarter.
Robert Eckert, chairman and chief executive officer of Mattel, said, "As expected, revenues continue to be challenging this year due to the overall economic environment, retailers tightly managing inventory, foreign exchange rates and the lack of entertainment-inspired toy lines. That said, we are continuing to make strong progress on reducing costs, rebuilding margins and generating strong cash flow."
On a regional basis, third-quarter gross sales declined 2% in the U.S. and decreased 14% in the international markets, including unfavorable changes in currency exchange rates of 5 percentage points.
Segmental Analysis
Mattel Girls & Boys Brands
The company's Mattel Girls & Boys Brands business unit generated worldwide gross sales of $1.08 billion, down 10% from $1.21 billion in the year-earlier quarter. Worldwide gross sales for the Barbie brand fell 8% from last year, with essentially flat domestic sales offset by international declines. Worldwide gross sales for Other Girls Brands were down 19%, hurt primarily by declines in the High School Musical and Polly Pocket toy lines, partially offset by higher sales of Little Mommy and Disney Princesses in the U.S.
Worldwide gross sales for the Wheels category, which includes the Hot Wheels, Matchbox and Tyco R/C brands, decreased 3%. Entertainment business, which includes Radica and Games and Puzzles, witnessed quarter gross sales decline of 15% for the quarter, mostly attributable to lower sales of Radica and toys geared to last year's summer entertainment properties, partially offset by worldwide sales of toys supporting Disney/Pixar's Toy Story and Toy Story 2, along with stronger U.S. sales of Disney/Pixar CARS related product.
Fisher-Price Brands
Third-quarter worldwide gross sales for the Fisher-Price Brands business unit, which includes the Fisher-Price Core, Fisher-Price Friends and Power Wheels brands, amounted to $784.8 million, a decline of 6%, compared to $833.1 million in the prior year, primarily due to declines in Fisher-Price Core and Fisher-Price Friends domestically.
American Girl Brands
American Girl Brands business unit, which offers American Girl branded products directly to consumers, fetched third-quarter gross sales of $82.4 million, compared with the prior-year's $78.8 million, an increase of 4%, reflecting the benefit of the opening of two new boutique stores in Boston and Minneapolis in November 2008.
Year-To-Date Highlights
For the nine-month period, the company reported net income of $200.3 million or $0.55 per share, compared to $203.2 million or $0.56 per share in the same period of last year. Net sales for the nine months ended September 30, 2009 were $3.48 billion, down from $3.98 billion reported a year ago.
Peer Review
Among Mattel's rivals, Hasbro Inc. (HAS | Quote | Chart | News | PowerRating) will issue third-quarter results on October 19, with analysts having a consensus earnings estimate of $0.93 per share, on revenues of $1.32 billion. For the third-quarter of fiscal 2008, the company earned $0.89 per share on net revenues of $1.3 billion.
On July 20, the Pawtucket, Rhode Island-based company said due to lower financing costs and joint venture amortization expenses, the 2009 dilution the company anticipated has been reduced to $0.15 - $0.20 per share from the previous guidance of $0.25 - $0.30 per share. For 2010, the dilution estimate has been reduced to $0.25 - $0.30 per share from the previous guidance of $0.30 - $0.35 per share.
Stock Quotes
Mattel shares, which have been trading between $10.36 and $19.58 in the past 52 weeks, closed Thursday's trading session at $19.58.
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