Mattel Q2 Results Miss Estimates, Hikes Dividend

(RTTNews) - Toy maker Mattel, Inc. (MAT) reported Thursday a sharp decline in second-quarter profit, mainly as net sales were hurt by weak performance by all brands, except American Girl Brands. Earnings per share and sales missed Wall Street analysts' estimates. Meanwhile, the company declared higher annualized dividend.

Bryan Stockton, chairman and chief executive officer, said, "..And while results for the quarter did not meet our expectations, we did see improving POS trends. As we move into the second half of the year and the all-important holiday season, we need to drive POS higher by bringing innovative products to market, making additional advertising investments and optimizing the effectiveness of our marketing spend."

For the second quarter, net income plunged 61 percent to $28.3 million or $0.08 per share from last year's $73.3 million or $0.21 per share. The latest results included a tax benefit of $0.11 per share, partly offset by a negative impact of $0.06 per share of MEGA Brands acquisition and integration costs. The acquisition of MEGA Brands for approximately $423 million was in April.

On average, 13 analysts polled by Thomson Reuters expected the company to report profit per share of $0.18 for the quarter. Analysts' estimates typically exclude special items.

Operating income fell 99 percent and operating margin was 0.1 percent, compared to 8.1 percent last year. Gross profit declined 18 percent, and gross margin was 46.4 percent, lower than prior year's 51.3 percent.

Worldwide net sales fell 9 percent to $1.06 billion from prior year's $1.17 billion. Eleven analysts estimated revenues of $1.19 billion for the quarter.

On a regional basis, gross sales fell 8 percent in the North American Region, comprising the U.S., Canada and American Girl, including a 1 percentage point unfavorable currency impact. International region's gross sales decreased 9 percent, including a 2 percentage point unfavorable currency impact.

Among brands, gross sales for Mattel Girls & Boys Brands declined 13 percent to $689 million with 15 percent drop in Barbiebrand sales and 11 percent decline in sales for Other Girls brands. Sales for the Wheels category were down 3 percent, and sales for the Entertainment business were down 19 percent.

Second-quarter gross sales for Fisher-Price Brands, which includes the Fisher-Price Core, Fisher-Price Friends and Power Wheels brands, declined 17 percent from last year.

However, sales for American Girl Brands, which offers American Girl-branded products directly to consumers, alone increased 6 percent.

Further, Mattel said its Board declared 2014 third quarter cash dividend of $0.38 per share, reflecting an annualized dividend of $1.52 per share, which represents a 6 percent increase from last year. The dividend will be payable on September 19 to stockholders of record on August 27.

In pre-market activity, Mattel shares are currently trading at $39.25, up $0.22 or 0.56 percent.