Mattel cuts jobs as sales sink on Toys ‘R’ Us demise
Mattel Inc. took another hit from the liquidation of Toys R’ Us Inc. as revenue fell for a fourth straight quarter and it announced plans to cut 22 percent of its corporate workforce.
The toymaker’s second-quarter sales plunged 14 percent to $841 million, the company said on Wednesday, trailing analysts’ projections.
The difficult second quarter for Mattel came as major customer Toys R’ Us was expected to finish closing all its U.S. stores after failing to emerge from bankruptcy. That’s left toy companies looking for ways to fill the $6.5 billion in U.S. sales the chain generated last year. Amazon.com Inc. and Party City Holdco Inc. are among the retailers making a push into the sector.
“This is a turnaround – it will take time,” Chief Executive Officer Ynon Kreiz, who replaced Margo Georgiadis in April, said in an interview.
The stock fell 4.9 percent to $15.49 at 4:08 p.m. in after-hours trading. The shares had gained 5.9 percent this year through Wednesday’s close.
The job cuts – which began this week and will total more than 2,200 – are part of a $650 million cost-cutting plan announced last year. The reductions are focused on back-office and support positions, Kreiz said.
As part of the spending reductions, Mattel also announced that it’s selling factories in Mexico. Kreiz is pushing the company away from doing its own manufacturing, so it can spend more on developing its intellectual property.
“Our core expertise is in creative,” Kreiz said. “We’ve been overly focused on putting resources behind manufacturing.”
Two bright spots for Mattel in the quarter were Barbie and Hot Wheels, its two biggest brands, which both continued to grow. The doll line increased sales 12 percent, a third straight gain. Hot Wheels sales advanced 21 percent.
The company’s adjusted loss was 56 cents a share. Analysts had projected a loss of 31 cents.