- Mattel on Thursday reported first quarter net sales — which included a $30 million net sales reversal — fell 4% as reported or 7% in constant currency. Gross sales in North America fell 4% on a reported and constant currency basis primarily driven by Toys R Us' recent liquidation, according to a company press release. Reported operating loss in the quarter was $276.6 million, and adjusted operating loss was $160.5 million.
- While gross sales plummeted 21% in the quarter for American Girl and 8% for Fisher-Price and Thomas & Friends, they rose 24% for Barbie and 15% for Hot Wheels — the company's "power brands."
- Also on Thursday, Ynon Kreiz, a Mattel director since June last year, joined executives on his first day as CEO. He was tapped to replace Mary Margaret Hastings Georgiadis, who had taken up the role just over a year ago, in February 2017, arriving from Google to replace Christopher Sinclair.
Mattel has been battered by the demise of Toys R Us, whose flagship banner was a giant global sales channel and whose Babies R Us unit was a major outlet for its Fisher Price toys and supplies, and a gateway, executives said Thursday, for young families with small children.
But Toys R Us was far from the brand's only sales channel. For the big toy brands like Mattel and Hasbro, Toys R Us only accounted for about 10% of their annual revenue, according to a note from S&P Global published in September. And Mattel's falling sales at brands like American Girl can't all be tacked on to the fall of the toy retailer. The doll brand is currently in the midst of a turnaround plan that involves amplifying the in-store customer experience. And there's "an action plan" set to improve sales of Fisher-Price, Thomas & Friends and American Girl collections, President and Chief Operating Officer Richard Dickson told analysts on a conference call Thursday. Dickson added that Barbie and Hot Wheels are continuing to deliver strong performance across regions. The company has been working to rebrand Barbie as "a platform for girl empowerment."
With a major global sales outlet gone, other retail opportunities are now all-important, as analysts and executives both noted Thursday. Indeed, the American Specialty Toy Retailing Association on Friday said that this year will be "the best year yet for neighborhood toy stores nationwide." And the Toys R Us collapse is likely to increase the market power of Target, Walmart, Amazon and other massive retailers that don't rely on toy sales year round and can afford to position toys as loss leaders during the holiday shopping season to drive traffic. Global investment banking firm Jeffries ahead of the holiday season last year had already noted that Amazon was poised to benefit from Toys R Us' struggles.
UBS Securities LLC analyst Arpiné Kocharyan Thursday asked for an idea of what those other retailers are telling Mattel about the future, but it's a new world without the largest toy retailer, with a new level of uncertainty. "It's very difficult to forecast this business,” she said on the call. "There is zero visibility, really, how the consumer will act in the back half [of the year]."