A challenging year at retail continues for the toy industry but Mattel is fighting back while making strides in strengthening its business.
The house that Barbie and Hot Wheels built reported global net sales of $1.08 billion in the second quarter, a 1% slide versus the same period last year. Sales in North America fell 3%.
This was a good quarter for Mattel, where we achieved significant gross margin expansion, and growth in Adjusted EBITDA and Adjusted EPS. We further strengthened our balance sheet and more than doubled free cash flow in the trailing twelve-month period. Mattel is well positioned for the second half, with new product innovation and increased retail support. We are in a strong financial position to execute our strategy to grow our IP-driven toy business and expand our entertainment offering.”
Reported operating income was $83 million, an improvement of $20 million. Adjusted operating income was $96 million, an improvement of $21 million. Reported earnings per share were $0.17, an improvement of $0.09 per share, and adjusted earnings per share were $0.19, an improvement of $0.09 per share.
Mattel attributes its 3% sales dip in North America to declines in Infant, Toddler, and Preschool (primarily Preschool Entertainment, Baby Gear & Power Wheels, partially offset by growth in Fisher-Price), Dolls (primarily Barbie), and Vehicles (primarily Matchbox and Hot Wheels), partly offset by growth in Action Figures, Building Sets, Games, and Other (primarily Games).
In the international segment, growth was seen in Vehicles (primarily Hot Wheels) and Infant, Toddler, and Preschool (primarily Fisher-Price).
The company says that worldwide gross billings in Dolls fell 6% versus Q2 last year primarily due to declines in Barbie and Disney Princess and Frozen. Infant, Toddler, and Preschool dipped 4% due to declines in Preschool Entertainment, Baby Gear & Power Wheels, partially offset by growth in Fisher-Price.
Meanwhile, Hot Wheels fueled a 2% spike in gross billings for Vehicles while Games drove a 1% gain in Action Figures, Building Sets, Games, and Other.
