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Dow Jones Newswires -- September 30, 1999
DJ Mattel Dn 6%, Sets 52-Wk Low On 3Q Earnings Worries
By Dwight Oestricher
NEW YORK (Dow Jones)--Investors nervous about Mattel Inc.'s (MAT) third-quarter earnings performance have brought the stock down to new lows, analysts said Thursday.
With consumer products companies Avon Products Inc. (AVP) warning that fourth-quarter earnings will be flat with the year ago and Gillette Co. (G) saying third-quarter sales will be weaker than expected, investor concern has grown about Mattel's second-half earnings, said Salomon Smith Barney Inc. analyst Jill Krutick in a research note Thursday.
The analyst estimated that international sales will rise about 3% to 5% in the second half, less than the 7% to 9% management had been expecting. She added that Mattel, the home of Barbie and Hot Wheels, remains pressured by a lack of mega-hit products, shifting retailer inventory programs, and changing dynamics in the market for children's toys.
Krutick maintained her third-quarter earnings estimate of 68 cents a diluted share, which she compared with 54 cents in the 1998 quarter.
Mattel's stock fell to as low as 18 11/16 Thursday, passing the 52-week low of 20 1/8 set Wednesday.
Revenue may be weak in the third quarter, said Morgan Stanley Dean Witter & Co. analyst Leah Stambler, who kept her third-quarter projection of 67 cents.
Retailers said sales of Barbie are up about 12% to 13%, compared with a year ago, said Stambler, but sales of Barbie and other products to retailers are low. Analysts said that although consumer demand for Mattel's products is steady, retailers have been slow to order and may be pushing orders into the fourth quarter, ahead of the holiday season.
"But there is no indication that they will have a 'must-have' toy at Christmas," said Stambler. She noted the company does have toy tie-ins with the upcoming Sesame Street movie, "The Adventures of Elmo in Grouchland," and Walt Disney Co.'s (DIS) co-production with Pixar (PIXR), "Toy Story 2."
A spokesman for Mattel declined to comment on the company's third-quarter earnings or stock movement. Mattel Chief Executive Jill Barad has said that the company's sales should rise 5% to 7% this year, earnings should come in at $1.50 in 1999, and earnings could grow by 15% annually.
Mattel reported operating income of 15 cents a share in the second quarter, flat with the 1998 period. Weakness in European markets resulted in a 9% decline in sales outside the U.S.
Shares of Mattel recently were down 1 5/16, or 6.5%, to 19 on volume of 5.4 million, compared with average daily volume in the NYSE-listed stock of 2.3 million.
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