Mattel's Q3 Profit Down on Recalls, Misses Estimates

Mattel reported Q3 net income declined 1% to $236.8 million or $0.61/share, compared to analyst expectations of $0.70/share. Revenues rose 3% to $1.84B, also missing estimates of $1.91B. Mattel took approximately $40M of charges related to its massive toy recalls (full story). Mattel was helped by a 10% increase in international sales, which partially offset a 2% decline in domestic sales. Among Mattel's core brands, worldwide sales of Barbie fell 4% and American Girl was flat, while Hot Wheels climbed 10% and Fisher-Price jumped 19%. "Despite the challenges the company faced during the third quarter, the business has performed fairly well, even with some supply chain disruptions that impacted our sales during the quarter," commented CEO Robert A. Eckert in a statement. Mr. Eckert added, "U.S. Barbie performance was soft and remains an area of focus, although a good portion of the decline in the quarter was directly related to the supply chain disruptions." Mattel said it repurchased 28.3M shares of its common stock at a cost of $645M during Q3. Mattel's earnings conference call is at 8:30 AM (check later for Mattel's earnings call transcript). Shares of Mattel fell 0.8% to $22.45 on Friday and were last up 2.1% to $22.93 in thin pre-market trading.

Sources: Press release, Bloomberg, MarketWatch, Reuters
Commentary: Why is Mattel Apologizing to the Chinese? • Mattel Announces Third Toy Recall • Is the Recall Frenzy Affecting Toy Stocks?
Stocks to watch: MAT. Competitors: HAS, JAKK

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