Mattel falls as Barbie loses popularity
Analysts aren't too worried, since the first quarter is the least relevant of the year for the toy industry.
With the holiday rush a distant memory, the first quarter is typically a slow time for toy companies. But this first quarter was particularly bad as global sales of Barbie products fell by 6%. It was the first sales decline for Barbie in 10 quarters, Bloomberg reported.
Overall, sales for the quarter were down 3% to $928.4 million -- less than the $984.7 million analysts were expecting. And profit was only $7.8 million, or 2 cents a share, far less than the 7 cents analysts wanted to see.
North America was a big disappointment, with revenue down by 9%. Another area of concern was the Wheels segment, including Hot Wheels toy cars, which saw a 6% global decline. The Fisher Price division was flat.
Retailers are being more cautious in this uncertain economy, and Mattel said it was surprised at the level of inventory reductions in stores. "We expect them to remain being cautious," said CEO Bryan Stockton in a conference call with analysts.
The quarterly numbers were affected by Mattel's $680 million buy of HIT Entertainment, the company known for Bob the Builder and Thomas the Tank Engine.
But analysts weren't too concerned, Bloomberg reports. One reason is because the first quarter is the least important to the company's bottom line. Another reason is because last year's sales were inflated from "Cars 2" toys.
And investors might give Mattel a little latitude here. Even after Monday's big drop, the stock is still up 18% in the last year. Shares of rival Hasbro (HAS), meanwhile, have fallen by 19%.
They need a new 'Gangsta' Rap Barbie'... with a hoodie an Escalade, and a 38.
They're just not keeping up with the times, that's why they're nor selling.
@CP73 - If your daughter thinks her Barbie is less realistic that Monster High there may be a problem. Yes, Barbie's proportions are out of whack, but she represents a human, not a fictions creature.
I remember a psychology study done several years ago evidence showed a high IQ among those child who played with dolls and action figures as opposed to those that just sat and watched television. Later the study was revised to included to add computer and hand held games and the highest IQs went to those who spent their early years creatively playing with dolls and action figures. Any action doll or figure can become an excellent learning toy when presented properly to a child.
Over the last serveral years Mattel has even gone out of its way to present Barbie in career modes and in different cultures. The problem is they are not presented but thrown at a child usually without adult supervision. With proper adult guidance Barbie, GI Joe, possibly even Monster High, can be used as to teach children and stimulate their imagination.
The key is adult supervision. Spend time with your child teaching them properly. Don't let the toy teach them, but teach them to use the toy.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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