Mattel misses second-quarter sales estimates, announces job cuts

(Reuters) – Mattel Inc’s (MAT.O) quarterly sales missed analysts’ estimates on Wednesday, weighed down by the liquidation of key customer Toys ‘R’ Us and the absence of a big movie tie-in in the quarter, sending its shares down 7.6 percent after the bell.

FILE PHOTO: Comic Con fans gather at the Mattel booth they participate in the opening preview night at Comic Con International in San Diego,California, U.S., July 19, 2017. REUTERS/Mike Blake/File Photo

The company also said that it will cut 2,200 jobs, or 22 percent of its global non-manufacturing workforce, and plans to sell factories in Mexico, as part of a $650 million cost-saving program.

Mattel had a total of about 28,000 employees as of Dec. 31, 2017.

The company’s net sales fell 13.7 percent to $840.7 million in the second quarter ended June 30, short of the $851.8 million analysts had expected, according to Thomson Reuters I/B/E/S.

Revenue from the company’s partner brands, which includes sales from toys based on movie franchisees fell 23 percent in the reported quarter.

“We had a one-off very big quarter last year because of Cars 3 which also skewed the results,” Mattel’s newly minted Chief Executive Officer Ynon Kreiz told Reuters.

The company, like the rest of the U.S. toy industry, has been hit hard by the liquidation of retailer Toys ‘R’ Us and said the closure of its biggest customer dented its gross sales by 10 percent in the second quarter.

“We … had a challenging second quarter driven primarily by the Toys “R” Us liquidation,” Kreiz said in a statement.

Kreiz, however, was optimistic that the company could recover lost sales from the defunct retailer, saying that he was in “deep conversations” with other retailers to fill the gap left by Toys ‘R’ Us.

Earlier in the week, rival Hasbro Inc (HAS.O) reported better-than-expected quarterly revenue and profit as sales of toys based on big movie successes, Avengers: Infinity War and Black Panther helped it pare losses from Toys ‘R’ Us’ liquidation.

Mattel’s net loss in the reported quarter widened to $240.9 million, or 70 cents per share, from $56.1 million, or 16 cents per share, a year earlier.

Excluding certain items, the company recorded a loss of 56 cents per share, bigger than the 30 cents analysts had expected.

Mattel shares fell to $15.05 on Nasdaq in extended trading.

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