Mattel's Sales Decline Less Than Expected -- 2nd Update

By Maria Armental 

Mattel Inc. reported a weaker sales decline in the first quarter as an uptick in North America helped offset the impact of the stronger dollar.

Shares, down 18% so far this year, rallied nearly 7% to $26.95 after hours.

However, the company's flagship Barbie brand, which once generated about $1.8 billion in annual sales, continued to struggle overseas; and the Fisher-Price preschool division also posted lower sales.

Mattel, the largest toy maker by sales, has been trying to revamp its business as sales slow amid criticism that its creative department has lost its luster, weighed down by layers of bureaucracy and a shift to pay for international expansion.

Christopher A. Sinclair took over as Mattel's chief executive following the firing of Bryan Stockton, who was dismissed after a dismal holiday season. Mattel initially described Mr. Stockton's departure as a resignation.

Mr. Sinclair, a former senior PepsiCo Inc. and Quality Food Centers Inc. executive who lacked managerial experience in the toy industry, has said he intends to rework the company's design, marketing and retail approaches.

North America sales in the latest period rose 8%, while the international segment booked a 14% decline, hurt by the currency exchange rates.

By brand, Barbie sales fell 14% to $146 million in the most recent period. The company said retail sales for Barbie in the U.S. were strong but fell abroad from the year-ago period.

Fisher-Price, geared to toddlers and preschool-age children, posted a 3% decrease in sales, and the wheels category, which includes Matchbox and Hot Wheels, saw a 1% increase. American Girl sales were flat at about $106 million.

In all, the company reported a loss of $58.2 million, or 17 cents a share, widening from a year-earlier loss of $11.2 million, or three cents a share. Excluding acquisition costs and other items, the loss was eight cents, compared with a three-cent profit a year earlier.

Net sales fell 2.5%, to $922.7 million, but rose 5% in constant currency.

Analysts surveyed by Thomson Reuters had projected a loss of nine cents a share on sales of $901.3 million.

Gross margin narrowed to 48.8% from 50.9% a year earlier, partly due to last year's acquisition of Mega Brands Inc.

Write to Maria Armental at [e-mail]

Corrections & Amplifications

Mattel Inc.'s first-quarter net sales fell 2%, to $922.7 million. An earlier version of this article incorrectly stated the dollar amount. (April 16, 2015)

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