Mattel Inc. reported a surprise drop in fourth-quarter sales, as
the toy maker was stung by sharp declines for core brands like
Barbie and the preschool Fisher-Price line.
While overall net income jumped 20% for the key holiday shopping
season, the bottom line growth was due to prior-year results being
stung by a litigation charge.
Mattel's latest results badly missed Wall Street's expectations,
possibly hurt by the soft performance at key brick-and-mortar
retail partners like Toys "R" Us Inc. and Target Corp.
"By every account, 2013 was a challenging and transformative
year at retail," Chairman and Chief Executive Bryan G. Stockton
said. "We didn't meet our growth expectations for the fourth
quarter, or the full year, mainly driven by weakness in the U.S.
market."
While the toy industry has been challenged by kids' rising
interest in smartphones and tablets, lessening interest in
traditional toys, Mattel has generally posted higher sales. Results
of late have been bolstered by the Monster High doll line, which
has characters that are the children of famous monsters with names
like Draculaura. The American Girl line has also been a strong
performer.
Overall, Mattel reported a profit of $369.2 million, or $1.07 a
share, up from $306.5 million, or 87 cents a share, a year earlier.
The prior-year period included a $137.8 million litigation charge
related to a long-running legal battle with Bratz doll maker MGA
Entertainment Inc.
Net sales slid 6.3% to $2.11 billion, as North American sales
dropped 10%, while the top line was flat internationally.
Analysts surveyed by Thomson Reuters expected a profit of $1.20
a share on net sales of $2.37 billion.
Gross margin widened to 54.5% from 54.3%.
Barbie sales slumped 13%, while Wheels sales, which includes Hot
Wheels, Matchbox and Tyco, decreased 11%. Other girls sales jumped
12%, primarily driven by Disney Princess.
Preschool line Fisher-Price's sales declined 13%. American Girl
sales were up 3%.
Write to John Kell at john.kell@wsj.com
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