Mattel Slowly Recovers after Toys ‘R’ Us Liquidation

Mattel Inc., an American toy company, showed some signs of recovery after Toys ‘R’ Us announced that it will going out of business, as strong demand for Barbie and Hot Wheels boosted its first quarter sales above the expectations of Wall Street.

The toy maker, whose shares increased almost 4 percent to $14.49 in after-market trading, stated that it has adequate liquidity amid the impact of Toys ‘R’ Us.

Meanwhile, the net sales of Mattel, which excluded a $29.5 million reversal in sales due to Toys ‘R’ Us liquidation, went up to $737.9 million in the quarter. This exceeded the average estimate of $694.38 million of analysts.

Analysts, on the other hand, have lowered their estimated sales by almost 3 percent since mid-March when Toys ‘R’ Us decided to liquidate their toy stores.

“While the Toys 'R' Us liquidation created some challenges, setting this aside, Mattel is off to a good start with early momentum,” stated Margaret Georgiadis, the outgoing CEO of Mattel.

The shares of Mattel have lost nearly half of its value over the past year as sales went under pressure. The toy maker has been trying to revitalize the line of dolls, such as changing the skin tones, adding plus-sized dolls, and making a hijab-wearing model.

Mattel’s plan seems to be working as its worldwide gross sales of its iconic brand, Barbie, increase 24 percent in the quarter. Meanwhile, the sales of its Hot Wheels brand hopped 15 percent.

“Since last fall, we have evaluated several Toys 'R' Us scenarios and have a proactive mitigation plan in place,” Joseph Euteneur, the chief financial officer, said.

The turnaround of the company would be slow as Mattel stated that it expects a fall in its second-quarter revenue, largely due to the liquidation of its top customer.

“This is not going to be easy... But I feel confident about where we sit and what we have to do to take it on,” the incoming CEO of Mattel, Ynon Kreiz, said.

See also: Mattel Inc. Names its New CEO

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