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Mattel Does NOT have the Best Financial Quarter: Shocker!

The topline …

Mattel Inc. said Monday that its first-quarter profit dropped 53 percent, pulled down by costs tied to an acquisition and lower sales for Barbie and Hot Wheels.

Results for the largest U.S. toy maker were below expectations and its shares fell more than 7 percent in trading. But the disappointing results came during what is typically a slow time for toy sales, so Mattel executives say they remain optimistic.

Mattel’s toy brands like Barbie, Hot Wheels and American Girl have been perennial best sellers in the toy aisle. But during the period — the smallest quarter of the year for toy makers — cautious reordering by retailers coupled with the timing related to shipping “Cars 2”-related toys last year, hurt results. That was particularly true in North America, where revenue slid 9 percent.

Two of Mattel’s most popular brands had declines across the globe. Worldwide gross sales for Barbie slipped 6 percent in the quarter, while sales of other girls’ brands rose 22 percent. The Wheels segment — which includes Hot Wheels and Matchbox — reported a 6 percent sales decline.

More Via AP.

SELECT comments from CEO Bryan Stockton during the conference call:

In North America, our shipping volume declined versus last year, primarily driven by 2 key factors: first, a decline in Cars shipping volume; and second, cautious retailer ordering patterns. Let me touch on each.

More than half of the U.S. shipping decline is attributable to the timing of last year’s Cars 2 movie launch. As we discussed, Cars 2 was and will be a first half tail — headwind for us as retailers were gearing up for the movie launch last year in the first and second quarters. That said, Cars continues to be a great success as an evergreen property, selling well over-the-counter and gaining NPD share in the first 2 months of 2012, both in the U.S. and Europe. Retailers were particularly cautious in their first quarter ordering patterns in the U.S. For the quarter, shipping lagged our POS as retailers reduced inventories. In fact, inventory at our top 4 U.S. customers fell mid- to high single-digit levels. Brands like Barbie experienced some of the most significant gaps between shipments and consumer takeaway.

Despite that, we continue to have the toy brands that consumers choose more often. Barbie, Hot Wheels, Monster High and Cars all gained NPD share in the U.S. through February 2012.

SELECT comments from CFO Kevin Farr …

Overall, sales for the region were down 9% due to lower shipment of Cars and as retailers focused on adjusting their inventories in the quarter. As we said earlier, Cars was a headwind for the quarter, and we expect that will continue for the first half of the year. As we’ve previously indicated, we continue to expect Cars’ seasonality and our total company seasonality to return to more historical levels in 2012.

The full transcript available at Seeking Alpha.

There are more questions in the Q&A portion in regards to CARS (you have to register at Seeking Alpha to see it – FREE to register).

But frankly, the analyst missed the BIG PICTURE in their questions – yes Q1 2012 is down from Q1 CARS 2011 BUT nothing from CARS 2 shipped until Q2 2011 so if anything, Q1 2012 should still be riding momentum from a 9-month old movie (and 3 month old DVD release) while Q1 2011 was the last Q of a 5 YEAR OLD FILM … so while they are focused on slower/lower shipments, they missed the BIG MISS from Q1 2012 versus Q1 2011 when CARS was on its last legs while CARS 2 should still be fresh legs.

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  • netmatrix says:

    I will be the first to say it. U DESERVE UR PREDICAMENT MATTEL!! Here in Malaysia we did not have the last 2 waves of Toons since mid last year. So i’m stuck with 6 less characters from Tokyo mater to complete. Ebay isn’t a good help either with knife in your neck prices. Also for Hot wheels. We also missed the last 2 waves of Hot Wheels Vintage Racing. But this could be because the cars are from Thailand and there was a big flood there last year. Still it didn’t show up. I sent a letter to them last month to no avail. (With good language of course!)

    I will be the first to say this, so curse your company! U don’t hear what people want! U are helping scalpers by short packing certain models to be sold for higher prices. Damn U!

  • Tom says:

    Are they really that cluless, or do they hope to dupe the Street analysts?
    Retailers didn’t order any Cars merch because their warehouses are still bursting with Finn McMissiles.
    “Adjusting their inventories…” Farr needs to check his head!
    As well Met’s excellent point that Q1 ’11 was a sell down period of C1 merch. We were all complaining about the pre-C2 drought back then, little did we know that was small time compared with this year’s drought. For them to act like the ship is still on course and that it was normal to have a smaller Q1 than last year makes me wonder if it isn’t time to pop drug-tests on Mattel upper management because they are not living in reality.

  • madbob says:

    Why are Mattel trying to cover up the huge mistake they made and why dont they own up to getting the case mixes wrong! Buying trends were down due to too much stock still left in there retailers inventory and that stock primarily was made up of 4 model types. Mattel mixed the cases with too many cars that customers already had and did it in too many of the case mixes.

    Hasn’t it not been reported that Mattel have had to manually rework the cases, due to this problem?

    • cac1959 says:

      I couldn’t have said it better, madbob…

      To expand:

      Abrupt end to Cars diecasts – failing to finish product lines which had been started (haulers, team crew sets, launchers, Final Lap, Movie Moments)

      Abrupt end to the Cars Toon diecasts.

      Multipacks (2, 3, 4, 5, 7, and 10) containing 1 or at most 2 new Cars with repeats that we already had.

      Horrible case assortments… decline in quality – not enough metal… prices too high… retailers not knowing how to order items (if we buy 500 of case A we won’t need to order any of cases B, C, D, and E)… The local Meijer currently has 8 Francesco, 4 McQueen, and 100 Finn McMissile singles on the pegs.

      Not re-releasing some of the most in demand Cars such as Lizzie and Sally when Cars2 items came on sale.

      Not providing online resellers with merchandise to sell; I’ve heard from several who have had orders placed for over 3 months yet haven’t received products.

      Single Cars priced at $3.99 and $4.99… 4 packs at $18.99… 5 packs at $22.99 – with gas going up in price, these are no longer impulse buys… I’ll pay $7.99 for a Movie Moments if it has 2 new Cars… I’ll pay $15.99 for a 4 pack with 4 new Cars… I won’t pay $30 for a 7 pack with 1 new Car or $47 for a 10 pack with 2 new Cars… and it’s been so long since stores had new stock that I haven’t made a trip to Dayton or Indianapolis or Cincinnati just to look for Cars for 4 months because there’s nothing there.

      Can Mattel regenerate my enthusiasm for Cars? Can they regenerate the enthusiasm for my friends?

  • John in Missouri says:

    Time for the big guy to make an appearance on “Undercover Boss”. Hey what’s up with all these Finn McMissiles??? Did YOU order all these?

  • bubbabob says:

    What a shock!

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