Retail continues to face a challenging year for the toy industry, but Mattel is fighting back while making strides in strengthening its business.
Worldwide net sales of the House That Barbie and Hot Wheels Built were $1.08 billion in the second quarter, down 1% from the same period last year. North American sales fell 3%.
It was a good quarter for Mattel, as we achieved significant gross margin expansion, as well as growth in Adjusted EBITDA and Adjusted EPS. We have further strengthened our balance sheet, more than doubling free cash flow in the last 12 months. Mattel is well positioned for the second half of the year with new product innovation and increased retail support. We have strong financial strength to execute our strategy to grow our intellectual property-driven toy business and expand our entertainment products.
Ynon Kreiz, Mattel Chairman and CEO
Reported operating income was $83 million, an increase of $20 million. Adjusted operating income was $96 million, an increase of $21 million. Reported earnings per share were $0.17, an increase of $0.09 per share, and adjusted earnings per share were $0.19, an increase of $0.09 per share.
Mattel attributed its 3% sales decline in North America to infant, toddler and preschool (primarily preschool entertainment, baby products and Power Wheels, partially offset by growth in Fisher-Price), dolls (primarily Barbie dolls) and vehicles (primarily Matchbox and Hot Wheels), partially offset by growth in action figures, construction sets, games and other (primarily games).
In international markets, growth was seen in vehicles (primarily Hot Wheels) and infants, toddlers and preschoolers (primarily Fisher-Price).
The company said total global doll revenue fell 6% compared with last year’s second quarter, primarily due to lower sales of “Barbie,” “Disney Princess” and “Frozen.” Infant, toddler and preschool declined 4% due to declines in preschool entertainment, baby products and power wheels, partially offset by growth at Fisher-Price.
Meanwhile, Hot Wheels drove total vehicle revenue growth by 2%, while games drove total revenue growth in figures, building sets, games and other areas by 1%.
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