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Mattel Inc. Shares Slump 15% as Investors Head for the Door

By Daniel Miller - Updated Oct 27, 2017 at 12:23PM

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It was more than just a bad third quarter that sent shares of Mattel lower.

What happened?

Shares of Mattel Inc. (MAT -2.80%), a manufacturer and marketer of toy products with well-known brands such as Barbie, Hot Wheels, and Fisher-Price, are down 15% as of 12:15 p.m. EDT. Investors headed for the door following discouraging news from the company.

So what

It's no secret that Mattel has seen better days, but investors are wondering if it can ever reclaim those glory days after management announced it would miss its full-year revenue forecast and also decided to halt its dividend beginning in the fourth quarter to increase financial flexibility and strengthen the balance sheet. The $0.15-per-share quarterly dividend would result in about $50 million in additional liquidity for the company per quarter. 

"Our Q3 performance was clearly disappointing, led by compression in North America driven by Toys 'R' Us filing for bankruptcy, tighter retailer inventory management and challenges with certain underperforming brands," said Margo Georgiadis, CEO, in a press release.

Plastic toy truck, plastic shovels, and other assorted toys in a ball pit.

Image source: Getty Images.

Now what

The road ahead for Mattel and its investors won't be easy -- turning around a worldwide net sales decline of 13% during the third quarter won't happen overnight -- but management is aiming to eliminate $650 million in net costs over the next two years, which would provide some relief. There's been a lot of shakeup in upper management in recent years, and the jury is out on whether or not the new team can execute a turnaround plan. Investors not willing to accept large risk should watch this one from the sidelines.

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