The maker of Barbie and Fisher Price toys made $30 million, or 8 cents a share, for the quarter ended March 31, compared with $6.5 million, or 2 cents a share, a year earlier. The latest quarter included tax benefits of $57 million, or 15 cents a share, relating to foreign tax audit settlements. Excluding the gain, the latest-quarter loss was 7 cents a share, missing the Thomson Financial estimate by 8 cents.
Revenue rose 1% from a year ago to $793 million, missing the $802 million analyst consensus estimate. Barbie sales dropped 8%, Hot Wheels sales skidded 3% and American Girl sales drooped 9%, with the company blaming that decline in part on a weak Easter. Fisher-Price sales rose 12%. Domestic sales rose 3% and international sales were flat.
"Although the first quarter is relatively less important in the highly seasonal toy business, we were encouraged by some of the sales trends," said CEO Robert A. Eckert. "Positive developments in the quarter included strong worldwide Fisher-Price growth and a slight increase in U.S. Barbie sales. Our profitability, however, was negatively impacted by continued gross margin pressure, as well as severance charges in the quarter. We expect the year to continue to be challenging and have implemented price increases effective in the second quarter for the U.S. We look forward in the near-term to the opening of American Girl Place -- Los Angeles this weekend and the rollout of the toy lines based on the CARS and Superman movies slated for release this summer."
The company swung to an operating loss of $32 million in the latest quarter from a year-ago operating profit of $5.5 million. The latest quarter included $13 million of severance charges related to the January 2006 reduction in workforce, primarily within the Mattel Brands division. Unfavorable product mix and external cost pressures also contributed to the operating loss.
Gross margin decreased by 210 basis points, while overhead increased by 270 basis points.