American multinational toy manufacturing company, Mattel’s shares plummeted more than 8 percent after the company announced its plan to cut 2,200 jobs as part of its cost savings strategy. The announcement regarding job cuts come just months after the company said it was shuttering its office in New York in April last year, which affected about 100 employees.
Detailed in October last year, the company said this reduction represents about 22 percent of its global non-manufacturing workforce. The cost savings program aims to eliminate $650 million in costs over two years, which Mattel expects to achieve one-third of the number this tear. As part of the move, the company had already planned to sell several manufacturing companies in Mexico.
On Wednesday (Jul 25), Mattel’s quarterly sales missed Wall Street estimates, deeply impacted by the bankruptcy and liquidation of key customer Toys ‘R’ Us and the absence of a big movie tie-in in the quarter. Mattel’s new CEO Ynon Kreiz said that they had a challenging second quarter driven primarily by the Toys “R” Us liquidation, CNBC reports.
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Net loss in the reported quarter widened to $240.9 million, or 70 cents per share, from $56.1 million, or 16 cents per share, a year earlier. Excluding items, Mattel lost 56 cents per share, a much steeper loss than the 30 cents per share analysts had expected, according to Thomson Reuters. Mattel’s net sales fell 13.7 percent to $840.7 million in the second quarter ended June 30, short of the $851.8 million analysts had expected.
Revenue from the company’s partner brands, which includes sales from toys based on movie franchisees, fell 32 percent from the year-ago quarter. The company saw weaker sales of its Cars toys, which was partially offset by sales of toys tied to Jurassic World.
The company, like the rest of the U.S. toy industry, has been hit hard by the liquidation of retailer Toys ‘R’ Us and said the closure of its biggest customer dented its gross sales by 10 percent in the second quarter.
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