Mattel stock falls 8% after quarterly earnings miss estimates

Shares of Mattel Inc. fell more than 8% in the extended session Wednesday after the company missed Wall Street expectations for quarterly profit and revenue and called for another flat year in sales, saying that the economy is worse than expected and retailers are shrinking their orders.

Mattel MAT earned $16 million, or 4 cents a share, in the fourth quarter, compared to $226 million, or 63 a share, in the year-ago quarter. The company earned 18 cents a share, adjusted for one-time items.

Revenue fell 22% to $1.4 billion, the company said, with declinings in nearly all of its toy lines, including Fisher-Price, games and action figures, and a 17% drop for sales of American Girl dolls. The drop was partially offset by gains for Hot Wheels and other toy-vehicle sales.

Analysts polled by FactSet predicted the company to report adjusted EPS of 29 cents on sales of $1.68 billion.

Net sales for 2022 of $5.44 billion were flat year-on- year, compared to expectations of $5.72 billion. The company led a year of flat sales in 2023, while the same analysts predicted $5.9 billion.

Chief Executive Ynon Kreiz said our fourth-quarter results were less than anticipated, as the macroeconomic environment was more challenging than anticipated.

Despite the challenges in the fourth quarter, the company gained market share and strengthened its financial position for the year, cutting down more debt, according to Chief Financial Officer Anthony DiSilvestro.

With our improved balance sheet and outlook for increased free cash flow, we expect to resume share repurchases in 2023, the CFO said.

In a call with analysts after the results, Mattel executives said retailers have reduced orders and are expected to trim inventories this year.

Mattel guided for adjusted EPS between $1.10 and $1.20 for the year, and capital expenditures between $175 million and $180 million, besides the guidance for flat 2023 sales.

The analysts who were surveyed by FactSet expect an adjusted EPS of $1.61 for the year.

In the last 12 months, Mattel's shares have dropped by around 6%, compared to a drop of around 9% for the S&P 500 index.