Toy Firm Cites Slow Sales : Mattel to Report Loss for ‘87; More Layoffs Expected

Mattel said Monday that it will report a loss for 1987 and may lay off more workers as a result of sluggish sales and a decision to reduce year-end shipments.

The announcement by the Hawthorne-based toy maker comes during an industrywide slump that has been triggered in part by the lack of any blockbuster products, such as Cabbage Patch Kids. “There’s nothing drawing people into the stores,” company spokesman Shel Holtz said. “The whole industry has been lackluster.”

Mattel, which makes Barbie dolls, would not say how much it will lose or the extent of any possible layoffs. For the first nine months of 1987, Mattel posted a loss of $12.4 million, contrasted with a profit of $18.6 million for the same period in 1986.

A review of department-by-department expenses might result in more layoffs and will hurt 1987 financial results, the company said. But the cuts are expected to help Mattel’s financial picture next year.

Holtz said the company’s decision to limit shipments is expected to reduce the amount of unsold toys left on retailers’ shelves after Christmas. As a result, sales should improve next year. “They will want to buy more products from the 1988 holiday line,” he said.

Mattel’s announcement did not draw much surprise. On the New York Stock Exchange, Mattel stock rose 25 cents a share to close at $7.875. “The market sees that toy makers are going to have a poor Christmas,” said Gregory H. Kieselmann, a securities analyst at Morgan, Olmstead, Kennedy & Gardner.

Last year, Mattel had a loss of $951,000 on sales of $1.05 billion. To help return the firm to profitability, company executives launched a program to reduce costs by $20 million. Mattel laid off 150 employees at its headquarters and eliminated another 150 through attrition. The company also closed its last U.S. plant in Paramount, which employed 150 workers, and shifted production to Mexico.

The company was also counting on such new products as Captain Power, which feature a toy spaceship that shoots infrared beams at cartoon characters on the Captain Power television show. But after a strong sales start for Captain Power, “we are starting to see some declines,” Holtz said.

Analysts also noted that the company’s international business--which was growing about 20% a year--declined this year as well.

“Early this year, they made some public statements that it was going to be a good year,” Kieselmann said. “For legal reasons,” he said, “when things change dramatically you got to make a statement like this.”