Mattel Falls Most Since 1999 as Outlook Disappoints Investors

(Bloomberg) -- Mattel Inc. fell the most in almost two decades after guidance disappointed investors who were expecting a more upbeat assessment following last week’s positive quarterly report.

• Sales will be flat this year, the company said in a presentation to investors, while a measure of earnings known as Ebitda will be in a range of $350 million to $400 million.

Key Insights

• Caitlin Noselli, an analyst with Bloomberg Intelligence, said investors were likely reacting to less-than-inspired forecasts after last week’s results. “People thought they would build on that momentum,” she said.
• Last week, Mattel reported a surprise profit, excluding some items, as it continued to shake off the liquidation of major customer Toys “R” Us Inc. with the help of aggressive cost cutting. That sent the shares soaring 23 percent on Feb. 8.
• Mattel has been criticized by investors for not shifting more toward entertainment, like rival toy companies Hasbro Inc. and Lego A/S. But Mattel Chief Executive Officer Ynon Kreiz is working to change this, and the company has announced new movies involving Barbie, Hot Wheels and on Friday: American Girl.
• While Barbie and Hot Wheels are still seen growing this year, their momentum will slow from last year, the company said. And sales of its Thomas & Friends and American Girl lines are expected to decline.

Market Reaction

• The shares tumbled 18 percent $13.82 in New York, the biggest one-day loss since October 1999. The stock had rallied 69 percent this year through Thursday’s close, and until Friday was the top-performing stock in the S&P 500 Index this year.

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