Wall Street may be losing faith in Mattel (NASDAQ: MAT)
Lackluster first-quarter sales and a weaker-than-expected gross margin have lead to questions about whether the Barbie-doll maker can complete its promised turnaround.
The El Segundo, California-based toy maker blamed retail inventory overhang from the holidays for the 15% drop in sales that impacted its most famous brands including Barbie, Fisher-Price and American Girl.
Mattel had forecast in its fourth-quarter earnings report that year-end inventories would negatively impact 2017 revenue by less than 2%. Mattel's CEO Margo Georgiadis said during an earnings conference call Thursday that the overhang is largely behind the company.
The toy company posted a loss of 32 cents U.S. per share, excluding items, or worse than the expected loss of 17 cents per share. Mattel reported net revenue of $736 million U.S. in Q4, below estimates for $801 million U.S. A year ago, Mattel had a loss of 13 cents a share and revenue of $869.4 million U.S.
Mattel adjusted its 2017 outlook due to the disappointing results, now expecting revenue growth to be in the mid-single digits. In February, the company said that it had expected revenue to grow in the mid- to high-single digits.
One toy industry analyst said that a lot will be riding for Mattel on the success of "Cars 3" toys, which are slated to garner about $300 million U.S. in sales for the company. Mattel will likely also see a boost from sales of "Wonder Woman" toys.
Shares of Mattel capsized $2.77, or nearly 11%, in midday trading Friday, last changing hands at $22.44 U.S.
