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Early this morning, Mattel (NYSE: MAT) announced that its quarterly loss totaled $51 million, or 14 cents per share. This loss met the Street's expectations, but it was also a penny wider than the same quarter a year ago. The toy giant blamed the larger-than-anticipated loss on a stronger dollar and inventory cuts at retailers. Quarterly sales dropped 15% to $785.6 million in the quarter, including a 7% hit from the stronger dollar, reducing overseas sales values.Mattel's CEO Robert Eckert stated that the company will keep controlling costs as "tough market conditions test the resilience of toy companies," which rely on parents to boost sales. Unfortunately for Mattel, parents have been cutting back on toy purchases in the current market environment, forcing retailers to cut inventories in an effort to curb excess merchandise. The article cites a report from market research group NPD Group that showed total retail toy sales dropped 3% in 2008.
Mattel recently cut 1,000 jobs in hopes of cutting costs, adding higher toy prices into the mix as well. The spring line of Mattel toys saw a mid-single-digit-percentage range price hike. How bad were toy sales in the quarter? Even Barbie, celebrating her 50-year anniversary saw first-quarter sales drop 5%.
Technically, Mattel is in the midst of a short-term rally (as is the broader market), but it has met resistance at its 20-week moving average. This trendline has capped the shares recently, forcing the equity steadily lower since the middle of 2007. The last time Mattel finished a week atop this trendline was the first week of this past January.
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