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Mattel (MAT) Shares Retail Woes on Sparse Christmas

Stocks in this article: MAT

NEW YORK (TheStreet) -- Mattel (MAT) saw worldwide net sales drop 6% over the holiday quarter with iconic brands Barbie, Hot Wheels and Fisher-Price bearing the brunt of poor numbers. In premarket trading on Friday, shares were down 9.7% to $38.83.

Retailers have had it tough over this holiday season as conservative consumer spending and an aggressively promotional environment hurt sales.

Mattel was not immune: For the December-ended quarter, the toy manufacturer suffered a 10% drop in North American gross sales, while international gross sales remained flat.

By brand, Barbie and Fisher-Price each lost 13% in gross sales, and Hot Wheels was down 8%. Though American Girl and Disney Princess items remained strong brands, their sales weren't enough to offset sluggishness across the portfolio.

The El Segundo, Calif.-based company recorded quarterly per-share earnings of $1.07 on revenue of $2.11 billion, 6.6% lower than a year earlier. Analysts surveyed by Thomson Reuters had expected earnings of $1.20 a share on $2.37 billion in revenue.

For fiscal 2013, North American gross sales fell 2%, offset by a 5% increase internationally. Full-year net earnings of $2.58 a share missed consensus by 16 cents. Revenue of $6.48 billion fell short of estimates by $262 million.

"By every account, 2013 was a challenging and transformative year at retail," said CEO Bryan G. Stockton in a statement. ""Overall, the global toy industry held up pretty well, but we did not meet our growth expectations for the fourth quarter, or the full year, mainly driven by weakness in the U.S. market."

It's a wait-and-see game to see whether weakness in the U.S. market is simply a factor of lower-than-normal store foot traffic in retailers such as Toys "R" Us or part of a larger problem of kids favoring electronics over traditional toys.

TheStreet Ratings team rates MATTEL INC as a Buy with a ratings score of A+. The team has this to say about its recommendation:

"We rate MATTEL INC (MAT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, expanding profit margins, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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