Mattel Inc. shares’ losing streak continued Monday after the toymaker lost the licensing rights for certain DC Comics products, including boys’ action toys, and Goldman Sachs analysts cut their estimates for the company.
Toronto-based Spin Master Corp. will be the new licensee for DC in the boys’ action category, remote control and robotic vehicles, water toys, and games and puzzles, displacing El Segundo-based Mattel. The three-year global agreement with Warner Bros. begins in spring 2020. Mattel will keep some of its licensing rights, including for preschool and girls’ toys, Goldman analyst Michael Ng said in a note to clients.
In October, Mattel reported gross sales of $303.9 million of its partner brands, including DC Comics, for the nine-month period that ended Sept. 30. That was a 15% decline from the same period last year. Mattel partially attributed the loss to lower sales of DC Comics girls’ and boys’ products.
Ng expects Mattel to “aggressively pursue” new licenses, noting that Hasbro Inc.’s licenses to Marvel and Star Wars toys expire in 2020.
In the meantime, investors may be watching the box office, where this weekend’s top performers included Warner Bros.’ “Aquaman,” based on the DC Comics character, and Hasbro’s new Transformers film, “Bumblebee.” The two movies helped propel the weekend receipts to the highest level in a month. “Aquaman” was the top performer.
Mattel shares, which were already trading at an 18-year low, dropped an additional 3.1% on Monday. The stock has lost nearly 40% of its value this year; the Standard & Poor’s 500 index, meanwhile, has lost about 12%.
The company reported net income of $6.3 million for the quarter that ended Sept. 30, compared with a loss of $603.2 million during the same quarter last year. But Mattel’s quarterly sales of $1.4 billion missed analysts’ estimates.
In July, the toymaker said it would cut more than 2,200 jobs as part of a $650-million cost-cutting plan announced last year. Like its industry rivals, Mattel has struggled to bounce back from the demise of Toys R Us this year.