Mattel (NASDAQ:MAT) Monday reported that first-quarter net income fell 53% on 2.5% lower sales. The maker of Barbie dolls and Hot Wheels toy cars said that earnings were impacted by costs related to last October's $680-million acquisition of U.K.-based HIT Entertainment, the company behind Thomas the Tank Engine and Bob the Builder.
For the quarter ended March 31, profit fell to $7.8 million, or 2 cents per share, from $16.6 million, or 5 cents, in the year-earlier period. Revenue slipped to $928.4 million from $951.9 million.
A survey of analysts by FactSet Research produced a consensus estimate of 7 cents per share on $986 million of revenue.
"As is often the case this time of year, we have work to do in certain areas across our portfolio of brands, countries and customers as we prepare to successfully execute the all-important holiday season," Mattel chief executive Bryan Stockton said.
The largest U.S. toymaker has seen earnings rise in recent quarters as international demand has boosted the resilience of its big-name brands such as Barbie and Hot Wheels.
Mattel increased toy prices at the beginning of the year in an effort to mitigate rising costs. Volatile crude oil prices and packaging expenses, as well as the rising cost of labor in China has added to uncertainty.
Worldwide gross sales for Barbie slipped 6 percent in the first quarter, while sales of other girls brands - which includes Monster High - rose 22 percent. The Wheels segment - which includes Hot Wheels, Matchbox and Tyco - reported a 6 percent sales decline.
Sales for the entertainment unit fell 17 percent mostly because of declines in the Cars property, while Fisher Price sales were essentially flat while sales of American Girl climbed 4 percent on strong sales.
Gross margin rose to 51 percent from 49.7 percent. Mattel also declared a second-quarter dividend of 31 cents per share to be paid on June 15.