Mattel posts first year-on-year growth in operating income in two years

Decreased revenue in China and Europe and a dip in Hot Wheels sales and plummet in brands like American Girl and Fisher-Price indicate there's still some post-TRU recovery to be had.
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For the first time in eight quarters, Mattel has posted year on year growth in operating income.

The global toymaker has reported third-quarter operating income of $121.9 million. This translates to 41 per cent growth from $86.2 million in the comparable year-ago period.

In North America, Mattel has seen sales increase four per cent year on year, the highest sales growth for the region since the fourth quarter of 2015.

The company also noted that its sales saw a negative three per cent impact from the liquidation of Toys R Us as well as a negative three per cent impact from the slowdown in its China business.

Share in the company subsequently leaped six per cent after the company’s report and while the $1.44 billion revenue fell short of the forecasted $1.49, Mattel has won the Q3 financials war with Hasbro who found retail inventories down 17 per cent in its own trading update.

“We are well-positioned as much as we can in the market, but there is no escaping the comparison of Toys “R” Us being out of the market,” said Ynon Kreiz, Mattel’s CEO.

The Barbie brand saw gross sales rise 14 per cent across the globe, signifying a recovery from its slump over the last few years. Fisher-Price and American Girl sales fell by 12 per cent and 31 per cent respectively and its Toy Box division posted a nine per cent overall decline.

Even Hot Wheels, which has put together a strong run in recent quarters, posted a six per cent decline.

Kreiz admitted that Europe is challenged as the retail market shifts to more discount retailers. Meanwhile, China suffered from an overestimation on demand for Mattel toys, leaving the firm with too much inventory.

Overall sales fell 8% to $1.44 billion, with the gross margin rising to 42.6% from 41.5% last year. 


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