Mattel shares plunge as 2019 forecast disappoints

(Reuters) – Mattel Inc on Friday issued a disappointing 2019 forecast, barely a week after posting a surprise quarterly profit, triggering an 18 percent drop in its shares.

FILE PHOTO: A worker carries Barbie dolls to put them on the shelves at a toy store in Caracas November 14, 2014. REUTERS/Carlos Garcia Rawlins/File Photo

The company said it expects adjusted earnings before interest tax, depreciation and amortization (EBITDA)of $350 million to $400 million for 2019, below estimates of $480.18 million, according to IBES data from Refinitiv.

The toy maker also forecast flat gross sales on a constant currency basis for the year as it expects weakness in Thomas & Friends and American Girl to offset comparatively stronger sales of its Barbie and Hot Wheels brands.

For the first quarter, Mattel said it expects lower gross sales, as it wrestles with the collapse of Toys “R” Us and currency fluctuations.

U.S. toy makers have been scrambling to find newer avenues to sell toys after the sudden liquidation of the world’s largest toy retailer.

However, a rise in Barbie sales had helped Mattel post strong fourth-quarter earnings on Feb. 7, with its shares surging 23 percent the following day.

On Friday, Mattel forecast capital expenditures to be roughly in line with 2018 when it spent about $152 million and said it would be increasing strategic investments to about $100 million in 2019.

The company has been aiming to cut at least $650 million in net costs by the end of 2019 through job cuts and other means.

Mattel also expects to keep reducing manufacturing costs, the benefit of which will be first seen in 2020, the company’s Chief Financial Officer Joe Euteneuer said in an investor presentation.

Shares of the company closed at $13.82, while rival Hasbro closed down nearly 4 percent.

Reporting by Arjun Panchadar in Bengaluru; Editing by Anil D’Silva

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