The company's Chairman and CEO Ynon Kreiz stated, "This was a very strong quarter for Mattel. We saw a major upswing in topline and a significant increase in profitability as we continued to make meaningful progress towards becoming an IP-driven, high-performing toy company. The toy industry, as a whole, grew significantly and continues to demonstrate its resilience in challenging economic times. Mattel's growth outpaced the industry as we gained share in key markets around the world and achieved growth in each of our four regions."
"Based on the POS momentum we are seeing, the low retail inventories and the early start of the holiday shopping season, we expect Net Sales and Gross Sales to grow in the fourth quarter. Looking to the full year, with continued operational savings and margin expansion, we expect to see strong Net Income and EBITDA growth and remain focused on creating long-term shareholder value," Kreiz added.
Mattel's CFO Anthony DiSilvestro commented, "We had an outstanding quarter with results exceeding our expectations. In spite of the pandemic, we have continued to make meaningful progress towards our strategy to restore profitability and regain topline growth. We are very pleased with the continuing improvements in Gross Margin, a key driver of our overall financial performance, as we continue to benefit from our cost savings programs. We believe we are well-positioned to maintain this momentum."
The company reported that net sales in Q3/20 increased by 10% (11% in constant currency) to $1.632 billion, compared to $1.482 billion in Q3/19. The firm stated that operating income in Q3/20 was $384.2 million and adjusted operating income was $401.3 million, representing increases of 156% and 131%, respectively, versus Q3/19.
Mattel reported that in Q3/20 earnings per share (EPS) increased by 355% to $0.91, compared to EPS of $0.20 in Q3/19. The company added that adjusted EPS in the quarter was $0.95, compared to $0.26 in the prior year's corresponding quarter which represented a 265% improvement.
Mattel advised that its highest priority has been to insure the health and safety its people while endeavoring to limit the disruption from the COVID-19 pandemic on its business. The firm said it is closely working with its retail partners to meet consumer demand heading into the holiday season and noted that the company's supply chain is fully operational and poised to deliver in order to meet the extraordinary growth in consumer demand for its products.
The firm reported that in constant currency, Q3/20 net sales in the North America segment increased 13%, International sales increased 8% and the American Girl segment decreased by 1%. The company explained that "net and gross Sales declined primarily due to lower sales in proprietary retail channels, mostly offset by higher direct-to-consumer sales."
The company also provided a breakdown of worldwide revenue by product category which indicated that in Q3/20 gross sales for dolls increased by 22% to $690.5 million. The firm stated that the increase was primarily driven by growth in the Barbie line of products. Additionally, gross sales for infant, toddler, and preschool decreased 6% to $404.1, while gross sales for vehicles rose 6% to $369.4 million driven by sales of Hot Wheels products and action figures, building sets, games, and other sales increased 14% to $354.5 million.
Mattel is headquartered in El Segundo, Calif., and is a global toy company and owner of some of the best known toy and game brands and family entertainment franchises in the world. Its well-known portfolio of brands include American Girl®, Barbie®, Fisher-Price®, Hot Wheels®, MEGA®, Thomas & Friends™, UNO® and others.
Mattel started the day with a market capitalization of around $4.5 billion with approximately 347 million shares outstanding and a short interest of about 5.1%. MAT shares opened more than 7% higher today at $13.85 (+$0.93, +7.20%) over yesterday's $12.92 closing price and bumped up to just below its $14.83 52-week high price this morning. The stock has traded today between $13.80 and $14.82 per share and is currently trading at $14.34 (+$1.42, +10.99%).[NLINSERT]
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