Mattel has reported its fourth quarter and full year 2018 financial results, reporting full year net sales of US$4.51 billion and Q4 net sales of US$1.52 billion.
The business saw strong increases in its evergreen brands, Barbie and Hot Wheels, in the quarter, with Barbie's gross sales up 12 per cent versus 2017, marking the fifth consecutive quarter of growth for the brand. Hot Wheels' gross sales jumped up nine per cent in Q4 compared to 2017, and reached its highest full year gross sales in its history.
The operating income of the business was US$107 million in Q4, an improvement of US$358 million compared to Q4 2017.
Net sales in Q4 were down five per cent, while gross sales decreased by 11 per cent in the quarter, compared to 2017.
For 2018, both net and gross sales for Mattel were down eight per cent compared to 2017, with the business citing a six per cent negative impact on gross sales from the Toys R Us liquidation and a two per cent negative impact from a slowing China business.
Chairman and CEO of Mattel, Ynon Kreiz, said that the work the business is doing to transform itself is paying off.
“Our fourth quarter results demonstrate meaningful progress in executing our strategy and significant improvement over last year.
“We remain focused on advancing our strategy to restore profitability and regain top-line growth in the short-to-mid-term and are laying the groundwork to capture the full value of our IP in the mid-to-long-term.
“After three consecutive quarters of solid, disciplined execution, we are well on our way to becoming an IP-driven, high-performing toy company and creating long-term value for our shareholders.
“Among all the achievements in 2018, I would like to applaud our team for regaining the [number one] toy company position globally [according to NPD] in a year full of challenges and headwinds.
“This is a great moment to celebrate, before we go back and continue the hard work of implementing our multi-year turnaround,” he said.
Geographically, net sales for the year in the North America region were down four per cent compared to 2017, while gross sales for 2018 in the region decreased five per cent, driven by a 12 per cent negative impact from the TRU demise. Internationally, in 2018, net sales declined seven per cent versus 2017, while gross sales decreased by eight per cent compared to 2017.
Reported gross margin for 2018 improved to 39.8 per cent versus 37.3 per cent in the prior year, while adjusted gross margin was up to 40 per cent versus 37.7 per cent in 2017.
These increases were driven by structural simplification measures which resulted in cost savings of US$177 million.
CFO of Mattel, Joseph Euteneuer, said that the key financial measurements are looking positive.
“Our key financial metrics, including gross margin, operating income, and earnings per share, are all moving in the right direction and our cost savings initiative is ahead of plan entering 2019.
“Looking forward, we have ample opportunities to improve our financial performance across the board as our business strategy continues to gain traction in the marketplace,” he said.
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