Mattel drops 15 percent as Toys R Us bankruptcy eats into sales

Simon Dawson | Bloomberg | Getty Images

Barbie dolls, manufactured by Mattel Inc.

Mattel on Thursday reported third-quarter results that were significantly impacted by the Toys R Us bankruptcy, sending shares of the Barbie owner down more than 24 percent after the bell.

The stock later rebounded somewhat to a point where it was down more than 16 percent.

Mattel reported adjusted earnings per share of 9 cents, compared to 57 cents expected by analysts surveyed by Thomson Reuters. The company also reported revenue of $1.56 billion, compared to $1.81 billion expected.

In North America, where Toys R Us filed for bankruptcy, Mattel said net sales dropped by 22 percent this quarter compared to last. Worldwide, they dropped 13 percent.

The toy maker also said it is suspending its quarterly dividend beginning in the fourth quarter of this year, “in order to increase financial flexibility, strengthen balance sheet and facilitate strategic investments.”

“Our third quarter 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 under-performing brands,” said Margo Georgiadis, CEO of Mattel.

The company also said it is “taking bold steps to simplify [its] business and right size [its] cost structure in alignment with our strategy.”