Dolls, Hot Wheels propel Mattel profit to US$70mBusiness | 30 Oct 2019 3:47 pm
Mattel Inc., helped by the resurgence of Barbie and other iconic toys, on Tuesday reported third-quarter results that handily beat analysts' forecasts and offered evidence that its multiyear turnaround is gaining momentum.
Its stock soared by 19 percent in after-market trading Tuesday.
Mattel said that it earned US$70.6 million, or 20 US cents per share, for the three-month period ended September 30. That compares with US$6.3 million, or 2 US cents per share, in the year-ago period.
Earnings, adjusted for restructuring costs, were 26 US cents per share. The average estimate of four analysts surveyed by Zacks Investment Research was for earnings of 8 US cents per share.
The El Segundo, California-based toy maker posted revenue of US$1.48 billion, a 3 percent increase from US$1.44 billion in the year-ago period. Five analysts surveyed by Zacks expected US$1.42 billion.
Barbie's gross sales increased by 10 percent. Mattel has been refashioning the Barbie doll assortments to include different skin tones and body types. One Barbie uses a wheelchair.
Hot Wheels gross sales grew by 25 percent. The company also cited its successful launch of dolls based on the popular South Korean seven-member boy band BTS.
"Our third-quarter performance demonstrates the continued momentum of our multi-year turnaround,'' said Mattel Chief Executive Ynon Kreiz in a statement.
Mattel also said it completed an independent investigation into the allegation contained in a whistleblower letter disclosed in an August 8 letter. The letter questioned whether there were accounting errors in past periods and whether Mattel's outside auditor was independent.
The inquiry determined that the company's income tax expense was understated in the third quarter of 2017 with no impact for the full year. The error was not disclosed to then-CEO Margaret Georgiadis. The probe also determined that Mattel has certain weakness in its internal control over financial reporting.
The company announced that Chief Financial Officer Joseph Euteneuer, who became CFO in 2017, will leave the company after a transition period of up to six months. Mattel is searching for its next CFO.-AP