Mattel’s Earnings Fall, Shares Off Slightly

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Mattel Inc. on Monday reported a slight dip in its third-quarter profit because of the charges, costs and delays on its supply chain related to recalls of toxic toys. The release had little effect on the company’s share price.


Mattel reported net income of $237 million (61 cents a share), a 1 percent slide from $239 million (62 cents) from the same period a year earlier, falling short of Wall Street’s expectations of 70 cents a share, according to a poll conducted by Thomson Financial.


Sales for the El Segundo-based toymaker rose 3 percent to $1.8 billion helped mainly by a weak dollar overseas, Mattel said in a statement. Analysts were expecting sales of $1.9 billion.


Since this summer, Mattel has recalled more than 21 million toys because of illegal levels of lead paint or choking hazards. Mattel said the latest-quarter results included charges of about $40 million related to the recalls.


Mattel also said that it still expects escalated costs associated with its toy safety monitoring system, but assured investors that the cost will be less than 1 percent of its total sales costs.


The recalls particularly stung sales of its Fisher-Price-brand Dora the Explorer toys, which saw sales of the brand drop 34 percent in the U.S. and 21 percent internationally. Sales of the company’s flagship Barbie brand also fell 4 percent, with increases in international sales partially offsetting a 19-percent slip in domestic sales.


Shares in Mattel were even at $22.45 in afternoon trading Monday on the New York Stock Exchange.

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