Toys “R” Us impact lingers
Toymaker Mattel (MAT) reported its third-quarter results on October 25. Its performance is still taking a hit from the dissolution of Toys “R” Us. It’s also seeing soft business trends in China and Europe. Mattel’s net sales were down ~8% to $1.44 billion YoY (year-over-year) and fell short of analysts’ estimate by 3.7%.
Its rival Hasbro (HAS) posted dismal top-line numbers for its third quarter, largely due to the Toys “R” Us dissolution. Its revenues fell 12% to $1.57 billion and fell short of analysts’ projection of $1.71 billion.
Jakks Pacific (JAKK) posted its third-quarter results on October 25. Net sales of $236.7 million missed the consensus estimate by 8.5% and fell 9.8% YoY. Higher sales of product lines such as Fancy Nancy, Incredibles 2, and Squish-Dee-Lish were offset due to the disruption caused by Toys “R” Us.
Mattel’s top line in detail
Mattel’s North American segment’s net sales were up 4%, but its International segment’s net sales were down 18%. North American sales were driven by strength in Barbie and Jurassic World products. In North America, gross sales of Barbie were up 22%. However, a softness in China and in Europe due to a tougher comparison with Cars 3 last year led to lower sales for the International segment. There was also a weakness in Fisher-Price and Thomas & Friends brands.
In the third quarter, gross sales for Toy Box declined 9% on a reported basis. Overall, gross sales of Fisher-Price and Thomas & Friends fell 12%, and American Girl sales plunged 31%. Gross sales for Hot Wheels decreased 6%, mainly due to an unfavorable comparison with Toys “R” Us’s exclusive product launch last year. However, gross sales for Barbie rose 14%.
Mattel remains focused on product innovation and developing its digital platform. It’s also upbeat about Mattel Films, its movie division created to develop content based on its intellectual property. The debut of the Thomas & Friends new TV series, which has had high viewership, is likely to bode well for the new Fisher-Price product line to be launched in 2019, according to Mattel.