Company “well-positioned” to respond to changing market conditions.
Mattel’s first quarter results showed net sales of $594m, down 14% versus last year, while the reported operating loss was $149.8m, compared to a loss of $127.1m last year. Mattel’s CFO Joseph Euteneuer commented: “Our accomplishments over the past two years position us well to respond to changing market conditions. In the first quarter, we delivered significant gross margin improvement with our highest first quarter gross margin since 2016, despite the Covid-19 disruption. Additionally, the cumulative savings from structural simplification and our additional 2020 actions are expected to exceed $1b over the course of the year. With cash on hand and access to our $1.6b senior secured revolving credit facilities, we expect to have sufficient liquidity to effectively manage through the disruption and to continue to execute our strategy.”
With regard to the Covid-19 pandemic, Mattel has taken preventative action to protect the health and safety of the organisation and mitigate disruption to the business. This includes the successful transition to a remote work structure for employees working in 35 countries, the implementation of stringent measures to safeguard personnel at plants and distribution centres and the temporary closure of Mattel’s American Girl retail stores. The global supply chain organisation has rapidly responded to the frequent and unpredictable changes occurring in various locations where Mattel operates. The team has taken mitigating actions to return manufacturing and distribution operations to near-normal operating capacity, including China, and is taking similar actions in other parts of the world where necessary. Mattel believes operations are on the right path to meet production needs for the second half of the year.
The global commercial organisation has also been working closely with retail partners to navigate the evolving retail landscape and consumer path to purchase. The team developed and launched new promotions and marketing activation initiatives that were tailored to new consumer behaviours. Additionally, joint business plans with retailers are being accelerated to compensate for the disruption and adapt to the retail environment, including transition to online retail and omni-channel experience. The design and category management organisations have been quick to respond to consumer needs and find new ways to engage with Mattel’s brands. The company recently launched the Mattel Playroom, a free online platform that offers parents and caregivers a centralised resource for activities, expert advice, games, and content from the company’s brands.
Mattel chairman and CEO Ynon Kreiz commented: “While the world has been facing the unprecedented health and economic impact of Covid-19, we have been quickly adjusting the way we operate and how we manage the company. Our top priority has been to protect the health and safety of our people and at the same time mitigate the disruption to our business. I am proud of how our team has embraced uncertainty and change and demonstrated resilience in the face of this challenge. Looking beyond the second quarter, with supply chain and retail distribution continuing to improve and markets reopening, we are planning for increased demand for our products in expectation of a much-improved second half and holiday season. We are confident in our ability to navigate through the balance of the year and believe our assets, resources, and capabilities position us well to succeed in the recovery.”