Mattel’s Q2 Net Sales Decline Driven by Toys”R”Us Closure

Mattel has released its second-quarter financial results, with net sales down 14 percent, primarily due to the liquidation of Toys”R”Us.

Worldwide net sales at Mattel were $841 million in Q2, as compared to $975 million during the same quarter last year. On a positive note, Barbie and Hot Wheels continued to be strong performers for the company, with gross sales for the hit properties up 12 and 21 percent, respectively.

In North America, net sales decreased by 14 percent versus the prior year’s second quarter. Internationally, net sales were down 10 percent. Net sales for the American Girl segment dropped by 32 percent as compared to Q2 2017.

Mattel has also announced its plans to reduce more than 2,200 positions and sell manufacturing sites in Mexico. In addition, the company is “on track” to deliver $650 million savings, reflecting progress in its Structural Simplification program to restore profitability and improve efficiency.

Ynon Kreiz, the chairman and CEO of Mattel, said: “Mattel is a company with great potential. We see a lot of opportunities, but there has been a big discrepancy between our financial performance over the last few years and where the company should be. While the industry is evolving, the toy market continues to grow, and we should be able to reverse our own trends given our strong standing and the quality of our assets. With that said, we are in a turnaround and as expected, had a challenging second quarter driven primarily by the Toys’R’Us liquidation. At the same time, we saw continued strong performance by Barbie and Hot Wheels, and we made substantial progress on our Structural Simplification program to restore profitability and improve productivity in the near-term.”

Kreiz continued: “Our goal is to transform Mattel into an IP-driven, high-performing toy company and I’m confident we have the right team, the right assets and the right strategy in place to achieve this and enhance long-term value for our shareholders.”

Joseph Euteneuer, the CFO of Mattel, added: “We are pleased to report that our two-year $650 million Structural Simplification program is on track. We are ahead of schedule with our SG&A savings actions and, as a result, expect full-year adjusted SG&A to be better than the outlook we provided earlier this year. While gross margin was challenged in the first half, we expect a significant sequential improvement in gross margin in the second half of the year.”