Mattel reported its second quarter 2019 financial results, with net sales up 2 percent and surpassing its structural simplification target of $650 million exiting 2019 six months ahead of schedule.
“This quarter further demonstrates the continued momentum of our multi-year turnaround strategy,” Ynon Kreiz, Mattel chairman and CEO, said. “We continue to gain traction and remain on-track to transform Mattel into an IP-driven, high-performing toy company.”
Kreiz also added that while the company has already exceeded its Structural Simplification, it expects to see additional savings and continue to make progress in laying the groundwork to capture the full value of its IP.
For the second quarter, net sales were up 2 percent, and up 5 percent in constant currency, versus the prior year’s second quarter. Gross sales were up 1 percent as reported, and up 4 percent in constant currency. Reported Operating Loss was $51.4 million, an improvement of $137.8 million, and Adjusted Operating Loss was $30.4 million, an improvement of $103.9 million. Reported Loss Per Share was $0.31, an improvement of $0.39, and Adjusted Loss Per Share was $0.25, an improvement of $0.29.
For the first six months of the year, net sales were flat as reported, and up 3 percent t in constant currency, versus the prior year’s first six months. Gross Sales were down 1 percent as reported, and up 3 percent in constant currency. Reported Operating Loss was $182.4 million, an improvement of $283.4 million, and Adjusted Operating Loss was $130.8 million, an improvement of $250.8 million. Reported Loss Per Share was $0.84, an improvement of $0.76, and Adjusted Loss Per Share was $0.69, an improvement of $0.70.
Mattel North America
For North America, net sales were up 1 percent bolstered by growth in action figures, construction toys and games (including Toy Story 4, partially offset by Jurassic World) and dolls (driven by Barbie). This was offset by a decline in infant, toddler, and preschool (including Fisher-Price Friends and Thomas & Friends) and vehicles (including lower sales for Jurassic World vehicles). Perhaps surprisingly, the Fisher-Price baby product recalls that headlines the news in the second quarter did not have much of an impact.
Mattel International
Net sales in the international segment increased 5 percent as reported, and 11 percent in constant currency, versus the prior year’s second quarter.
Gross sales in the international segment increased 3 percent as reported, primarily driven by growth in action figures, construction toys and games (including Toy Story 4 partially offset by Jurassic World), dolls (including Barbie and Polly Pocket partially offset by Enchantimals), and vehicles (including increased sales for Hot Wheels partially offset by lower sales for Disney/Pixar Cars and Jurassic World vehicles). This growth was partially offset by a decline in infant, toddler and preschool (including Fisher-Price core and Thomas & Friends). Gross Sales in the International segment increased 9 percent in constant currency.
Net sales in the American Girl segment continue to slump, down 22 percent as reported, and in constant currency, versus the prior year’s second quarter. Gross sales in the segment dropped 23 percent as reported, and in constant currency, primarily driven by lower sales in proprietary retail and direct channels.
Mattel CFO Joseph Euteneuer, said, “We continue to execute toward our goal to restore profitability and regain topline growth in the short-to-mid term, and to capture the full value of our IP in the mid-to-long term. The benefits of the team’s hard work are clearly materializing across the P&L. We remain focused on sustained progress, methodical execution and the creation of long-term shareholder value.”