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Mattel posts small profit, but sales fall again despite Barbie's strong showing

Mattel posts small profit, but sales fall again despite Barbie's strong showing
Dozens of Mattel's Barbie dolls gather at the Toy Fair in New York on Feb. 20, 2018. (Mark Lennihan / Associated Press)

Mattel Inc. eked out a small profit in the third quarter, but the troubled toymaker, its problems exacerbated by Toys R Us’ demise and softer demand in China and Europe, said its quarterly sales again fell from a year earlier.

The El Segundo company’s flagship Barbie line of dolls continued to be the bright spot with higher sales, but its Hot Wheels, Fisher-Price and American Girl brands again suffered year-over-year sales declines.

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Under the guidance of Ynon Kreiz, who was named chief executive in April, Mattel is undergoing a restructuring effort to slash expenses, bolster sales and end losses. The company in July said it was eliminating more than 2,200 jobs as part of a $650-million cost-cutting plan announced last year.

“We are on track with the execution of our strategy and have made meaningful progress toward restoring profitability,” Kreiz said in a statement Thursday.

“In the quarter, we achieved operating income of $122 million, up 41% versus the same period last year, which is the first time in eight quarters that we have posted year-over-year growth.”

Mattel posted net income of $6.3 million, or two cents a share, compared with a $603.3-million loss a year earlier that included a major tax-related charge.

After adjustments for restructuring charges, severance costs and other items, net income in the quarter ended Sept. 30 was 18 cents a share, which fell just short of analysts’ average forecast of 20 cents, according to FactSet.

Mattel’s quarterly sales of $1.44 billion also missed analysts’ estimate of nearly $1.5 billion. Mattel’s sales fell 6% from a year earlier when adjusted for currency fluctuations, which the company blamed partly on the liquidation of retailer Toys R Us earlier this year.

Hasbro Inc., Mattel’s primary rival, earlier this week also cited the loss of Toys R Us for a 12% drop in its third-quarter sales. Both companies are working to find enough alternative retailers to make up for the loss of Toys R Us’ outlets.

Mattel said its international sales tumbled 14% from a year earlier after currency adjustments, driven mainly by lower sales in China and Europe.

But Mattel said its North American sales, led by Barbie, rose 4% despite the Toys R Us-related problems, which apparently cheered investors.

Mattel’s results were announced after regular stock-market trading, during which Mattel’s stock gained 3% to $13.84 a share. The stock then jumped an additional 7.7% to $14.90 a share in after-hours trading.

Sales of Barbie products rose 17% worldwide to $374.7 million in the quarter. But sales of Hot Wheels toys fell 3% from a year earlier, sales of Fisher-Price and Thomas & Friends brands fell 10% and American Girl sales tumbled 31%. All the sales changes were adjusted for currency fluctuations.

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