Toy maker Mattel (MAT 21.30) reported its second quarter results after Thursday's close. They had a few bright spots, but overall, the results were fairly disappointing.
Worldwide net sales increased 2% on a reported basis to $974.5 million, paced by a 3% decrease in the North America region, yet a much higher cost of sales led to a 430 basis points decline in Mattel's gross profit of 41.0% of sales.
The gross margin pressure fueled a reported operating loss of $48.1 million and an adjusted operating loss of $40.1 million. Mattel's reported loss per share was $0.16 and its adjusted loss per share was $0.14, the latter of which was shy of analysts' average expectation and down from a loss of $0.02 per share in the same period a year ago.
Worldwide gross sales for Mattel Girls & Boy Brands were up 10% on a reported basis to $609.9 million, led by a 58% increase in Entertainment sales. Worldwide gross sales declined 5% for Barbie, 6% for Wheels, and 28% for Other Girls.
The breakdown didn't get much better for Mattel's other brands.
Worldwide gross sales for Fisher-Price Brands declined 3% to $335.0 million, and they fell 6% and 27%, respectively, for American Girl brands and Construction and Arts & Crafts brands.
The second quarter results followed on the heels of the company's announcement in mid-June that it cut its quarterly dividend to $0.15 per share from $0.38 per share, underscoring the operating challenges the company is facing.
Mattel is engaged in a turnaround initiative with the aim to "future-proof" the company to deliver enhanced, sustainable growth over the medium term. The second quarter results, however, demonstrate that the future is still the future.
Mattel's past and present challenges are the driving reasons why its stock has fallen 36% over the last 52 weeks and traded down another 4.0% in Thursday's after-hours action.