Last Updated on January 3, 2020 by Danielle
Despite Toys R Us going out of business, Mattel beats out Wall Street expectations with revenue rising to $737.9 million in the first quarter but reports a wider net loss of $311.3 million.
Mattel’s first quarter results have been officially reported. So how did it perform? Hasbro blamed Toys R Us’s liquidation for its lackluster first quarter sales performance. However, despite Toys R Us going out of business, Mattel managed to beat out Wall Street expectations with sales rising to $737.9 million for the first quarter. This excludes $29.5 million of reversal sales related to the Toys R Us liquidation.
Mattel reportedly has adequate liquidity even though Toys R Us greatly impacts its business. According to Thomson Reuters, Mattel’s sales outperformed average analyst estimates of $694.38 million. When Toys R Us announced plans to liquidate stores, analysts had reduced their sales estimates accordingly by roughly 3 percent.
Departing CEO Margo Georgiadis told analysts: “While the Toys R Us liquidation created some challenges, setting this aside, Mattel is off to a good start with early momentum.”
Last week, Mattel announced Ynon Kreitz as the successor to Georgiadis after she stepped down as CEO after 14 months at the helm.
Interestingly, Mattel’s stock has taken a beating over the past year with sales under scrutiny – losing nearly 50 percent of its value.
Evidently this strategy has worked out for Mattel, as global gross sales for Barbie have increased 24 percent for the quarter. Meanwhile, Hot Wheels sales soared 15 percent.
Joseph Euteneuer, Mattel’s CFO, stated: “Since last fall, we have evaluated several Toys R Us scenarios and have a proactive mitigation plan in place.”
However, Mattel expects second quarter sales to decline as a direct result of Toys R Us’s liquidation. Despite the mitigation plan, Mattel admitted the turnaround won’t happen immediately – rather it will be more of a gradual process.
Newly announced CEO Ynon Kreitz stated: “This is not going to be easy … But I feel confident about where we sit and what we have to do to take it on.”
Despite the better than expected revenue, Mattel reported a bigger net loss of $311.3 million for the first quarter.