Mattel sees Q3 sales fall and blames Toys R Us bankruptcy

Mattel has seen a 13 per cent fall in its global sales in the third quarter from a year ago due largely to the continued financial strife of Toys R Us.

CEO Margo Georgiadis has blamed the drop in sales on the retail giant’s bankruptcy.

Mattel reported $1.56 billion in third-quarter net sales ended Sept 30. Analysts had expected net sales of $1.81bn.

Mattel has reported lower-than-expected sales in nearly every toy brand and category, particularly American Girl, which was down 30 per cent, Monster High, DC Super Hero Girls and Thomas & Friends.

Toys under the Cars brand was one of the only areas to see an increase in sales.

Shares fell as much as 27 per cent in after-hours trading.

The company posted a net loss of $603.3 million, or $1.75 per share, in the third quarter, compared with a profit of $236.3 million a year earlier.

Georgiadis said in a statement that losses were driven by Toys R us filing for bankruptcy, tighter retailer inventory management and challenges with certain underperforming brands.

“Despite these challenges, we are making strong progress against our transformation plan, which we believe will deliver step change revenue growth and profitability,” she said.

“To accelerate progress toward these goals, with our new leadership team in place, we are taking bold steps to simplify our business and right size our cost structure in alignment with our strategy.”

Over the past three years, Mattel has seen sales fall from $6.5 billion to $5.5 billion, gross margins tumble from 53.6 per cent to 46.8 per cent, while net income dropped from $904 million to $318 million.

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