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Shares of Mattel Inc. dropped more than 8% in the extended session Wednesday after the toy maker missed Wall Street expectations for quarterly profit and revenue and called for another flat year in sales, saying that the economy was worse than it expected and that retailers are shrinking their orders.
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earned $16 million, or 4 cents a share, in the fourth quarter, compared with $226 million, or 63 a share, in the year-ago quarter. Adjusted for one-time items, the company earned 18 cents a share.
Revenue fell 22% to $1.4 billion, the company said, listing declines 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 partly offset by gains for Hot Wheels and other toy-vehicle sales.
Analysts polled by FactSet expected 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 with expectations of $5.72 billion. The company guided for another year of flat sales in 2023, while the same analysts forecast $5.9 billion.
“Our fourth-quarter results were below our expectations, as the macroeconomic environment was more challenging than anticipated,” Chief Executive Ynon Kreiz said in a statement.
Chief Financial Officer Anthony DiSilvestro said that the company gained market share despite the “challenges” in the fourth quarter and strengthened its financial position for the year, cutting down more on debt.
“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 that retailers reduced orders and are expected to trim inventories this year.
Besides the guidance for flat 2023 sales, Mattel guided for adjusted EPS between $1.10 and $1.20 for the year, and capital expenditures between $175 million and $180 million.
The analysts surveyed by FactSet expect adjusted EPS of $1.61 for the year.
Shares of Mattel have dropped around 6% in the last 12 months, compared with a drop of around 9% for the S&P 500 index.
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