Mattel's Earnings and Revs Beat in 1Q - Analyst Blog
17 Abril 2013 - 10:00AM
Zacks
Mattel Inc.'s (MAT) first-quarter 2013 earnings
of 11 cents per share beat the Zacks Consensus Estimate by 37.5%
and were considerably higher than the year-ago earnings per share
of 2 cents. Year-over-year increase in net sales combined with
lower costs led to the growth in earnings.
During the quarter, net sales grew 7.0% year over year to $995.6
million, despite unfavorable impact of currency translation. The
American Girl line was the major contributor to sales growth.
Revenues also edged past the Zacks Consensus Estimate of $983.0
million.
Quarter Highlights
Worldwide gross sales were $1.1 billion, up 7.0% year over year.
Gross sales from North America (including the U.S., Canada and
American Girl) increased 5% year over year while
international gross sales leaped 9.0% year over year, despite an
adverse currency impact of 2 percentage points.
Mattel’s product segments comprise Mattel Girls & Boys
Brands, Fisher-Price Brands and American Girl Brands.
Gross sales at Mattel Girls & Boys
Brands increased 11% year over year to $692.2
million. Barbie sales were down 2%. However, Other Girls Brands
sales shot up 56% buoyed by the Monster High brand.
Gross sales of the Wheels business, which consists of the Hot
Wheels, Matchbox and Tyco R/C brands, slipped 2%. Sales from
Entertainment business nudged up 1%.
Sales from Fisher-Price Brands
unit,which includes Fisher-Price Core, Fisher-Price Friends and
Power Wheels brands,slumped 7% to $287.3 million hurt by
Fisher-Price Core brand.
Led by Saige, theAmerican Girl Brands
leaped 32% to $100.5 million, powered by sound business in all core
doll segments. A solid retail performance also boosted the
segment.
Gross margin expanded 320 basis points (bps) year over year to
54.2% while operating margin grew 350 bps to 6.6%. Lower cost of
sales had a positive impact on gross margin. Operating margin
benefited from lower selling and administrative expenses and flat
advertising expenses ratio.
Our Take
Following its lower-than-expected performance last quarter,
Mattel turned around this time by beating both top-and bottom-line
estimates by wide margins. The company’s strong performance
especially in debt-ridden Europe deserves a special mention.
Management expects the top line to improve in 2013 and beyond
with strong momentum in the girls segment, Hot Wheels in the boys
business as well as Thomas and Friends brands in the Fisher-Price
portfolio.
However, increasing input costs and a tough retail environment
remain the areas of concern. Moreover, persistent sluggishness in
its powerhouse brand Barbie also remains an overhang. Mattel
currently carries a Zacks Rank #3 (Hold).
Some other toy companies which will likely report their earnings
in coming days are Hasbro Inc. (HAS),
LeapFrog Enterprises Inc. (LF) and
Activision Blizzard Inc. (ATVI). Hasbro is slated
to report on Apr 22 while LeapFrog and Activision Blizzard will
likely report on May 2 and May 6, respectively.
ACTIVISION BLZD (ATVI): Free Stock Analysis Report
HASBRO INC (HAS): Free Stock Analysis Report
LEAPFROG ENTRPS (LF): Free Stock Analysis Report
MATTEL INC (MAT): Free Stock Analysis Report
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