BENGALURU: Mattel, Inc., (Mattel) reported an 8 per cent drop in worldwide gross sales and a 7 per cent drop in gross sales in the North American region for Q3-2014. Worldwide gross sales by Mattel’s core brands and other brands which include- Barbie® (was down 21 per cent); Hot Wheels® (was up 5 per cent); Fisher-Price® brands (was down 16 per cent) and American Girl® (was down 7 per cent). Gross sales for Other Girls brands was up 1 per cent, primarily due to Disney Princess and Ever After High®, partially offset by Monster High®, says the company. For the third quarter, worldwide gross sales for Mattel Girls & Boys Brands were US$ 1.32 billion, down 11 per cent versus the prior year.
“While third quarter results did not meet our expectations, they do reflect progress towards achieving our goal to end the year with improved POS momentum and reduced inventory levels,” said Mattel chairman and CEO Bryan G. Stockton. “Global POS was positive in the quarter, and inventories at retail, both in the US and in international markets, were lower. Clearly we have work to do as we enter the fourth quarter, and we remain focused on executing during the all-important holiday season and beyond.”
Let us look at the numbers reported by Mattel for Q3-2014
For the quarter, net sales were US$ 2.02 billion, down 8 per cent compared to US$ 2.21 billion last year. On a regional basis, third quarter gross sales decreased 7 per cent in the North American Region, which consists of the United States, Canada and American Girl, with no impact from changes in currency exchange rates. For the International Region, gross sales decreased 7 per cent, including an unfavorable impact of currency exchange rates of 1 percentage point. Operating income for the quarter was US$ 409.5 million, compared to prior year’s operating income for the quarter of US$ 528.2 million. The Company’s debt-to-total capital ratio as of 30 September, 2014 was 41.2 per cent.
Cash flows used for operating activities were approximately US$ 144 million, compared to approximately US$ 321 million in 2013, driven by lower working capital usage. Cash flows used for investing activities were approximately US$ 604 million, an increase of approximately US$ 428 million, driven by the acquisition of MEGA Brands. Cash flows used for financing activities and other were approximately US$ 29 million, compared to approximately US$ 432 million in 2013. The change was primarily due to lower repayments of long-term debt and lower share repurchases, partially offset by lower proceeds from stock option exercises.
Sales by Brands
Mattel Girls and Boys Brands
For the third quarter, worldwide gross sales for Mattel Girls & Boys Brands were US$ 1.32 billion, down 11 per cent versus the prior year. Worldwide gross sales for the Barbie brand were down 21 per cent. Worldwide gross sales for Other Girls brands were up 1 per cent, primarily due to Disney Princess and Ever After High®, partially offset by Monster High®. Worldwide gross sales for the Wheels category, which includes the Hot Wheels® and Matchbox® brands, were up 4 per cent. Worldwide gross sales for the Entertainment business, which includes Radica® and Games, were down 23 per cent.
Fisher-Price Brands
Third quarter worldwide gross sales for Fisher-Price Brands, which includes the Fisher-Price Core, Fisher-Price Friends and Power Wheels® brands, were US$ 663.4 million, down 16 per cent versus the prior year.
American Girl Brands
Third quarter gross sales for American Girl Brands, which offers American Girl-branded products directly to consumers, were US$ 113.3 million, down 7 per cent versus the prior year.
Construction and Arts & Crafts Brands
Third quarter gross sales for Construction and Arts & Crafts Brands, which includes the MEGA BLOKS® and RoseArt® brands, were at US$ 123.4 million; Mattel acquired MEGA Brands Inc. on 30 April, 2014.
As mentioned earlier, on AnimationXpress.com, the Disney Princess and Frozen franchise has been grabbed by Hasbro, Inc. A new Disney agreement gives Hasbro global rights (excluding Japan) to develop dolls based on Disney Princess stories and characters including ‘Cinderella’, ‘Beauty and The Beast’, and ‘The Little Mermaid’ as well as ‘Frozen’ beginning in 2016.
Mattel’s sales have been falling over the past few quarters, the fall would have been sharper, but for the Disney Princess and Frozen franchisee.