Mattel, Inc.(NASDAQ: MAT) stock crashed over 13.9% on October 27th, 2017 (as of 12:36PM EDT; Source: Google finance) due to their weak third quarter of 2017 performance. The group corrected over 52% in this year to date showing the investors weak sentiment on the stock.
The group’s worldwide net sales lost 13% as reported, and fell 14% in constant currency while gross sales lost 13% as reported, and down 15% in constant currency. Toys “R” Us bankruptcy filing coupled with tighter retailer inventory management and weak performance of certain underperforming brands hurt the top line sentiment. North American performance was weak due to Toys “R” Us filing for bankruptcy.
Moreover, management suspended their quarterly dividend beginning in the fourth quarter of 2017 in order to enhance their financial flexibility, boost their balance sheet as well as facilitate strategic investments. The suspension of the quarterly dividend, which was previously $0.15 per share would lead to further liquidity of over $50 million per quarter.
Consumer takeaway for Barbie® rose on a double digits basis during the year to date while Hot Wheels® and Fisher-Price® increased by mid-single digits. However, Thomas & Friends™ fell by high-single digits. Barbie enhanced by double digits during the quarter while Hot Wheels and Fisher-Price increased by low-single digits.
On the other hand, the group is on track with their transformation plan, which would deliver step change revenue growth and profitability. To achieve this, the group got new leadership team in place, and simplifying their business and sizing their cost structure to comply with strategy. Management is optimistic that the future of Mattel and their ability to reposition the company to drive enhanced returns for shareholders. The group aims to eliminate at least $650 million in net costs over the next two years.
Mattel Reported loss per share of $1.75, which was negatively impacted by a non-cash charge related to a valuation allowance on U.S. deferred tax assets of $561.9 million, and adjusted earnings per share was $0.09.