Toy maker, Mattel Inc. (MAT) is well known for brands like Barbie, Hot Wheels and Fisher Price. Mattel is focusing on improving its sales with initiatives like introduction of more products, brand innovation and other strategic initiatives. The company acquired Mega Brands, a leading global brand in the construction building sets and arts & crafts category in Apr 2014.
However, the company is facing troubles over the past few quarters owing to weak demand for traditional toys. In fact, sluggish performance of the Fisher-Price and Barbie Brands has been a matter of concern for Mattel. The rate of year-over-year decline in revenues has increased every quarter for these brands due to increased inclination of kids toward electronically driven devices.
Investors should also note the recent earnings estimate revisions for MAT, as the consensus estimate has been mostly moving downwards. Moreover, MAT’s earnings and revenues have been comparatively weak over the past few quarters. Mattel has delivered negative earnings and revenues in all the trailing four quarters, making for a negative average earnings surprise of 59.8%.
Currently, MAT has a Zacks Rank #4 (Sell) but that could change following Mattel’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: MAT misses on earnings. Our consensus earnings estimate called for EPS of 96 cents per share, and the company reported EPS of 52 cents per share instead. Investors should note that these figures take out stock option expenses.
Revenues: MAT reported revenues of $1.99 billion. This missed our consensus estimate of 2.16 billion.
Key Stats to Note: Gross margin declined 410 basis points to 50.4% in the fourth quarter due to higher expenses related to the acquisition of acquisition of Mega Brands while selling general and administrative expenses increased 390 basis points as a percentage of sales. Owing to higher expenses, operating income was only $237.0 million, down approximately 51% year over year.
Stock Price: MAT shares were down almost 4.8% ahead of the report.
Check back later for our full write up on this MAT earnings report later!
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