Mattel, American Girl sales skid in the third quarter

October 29, 2017

Revenue fell 30 percent for Middleton-based American Girl in the third quarter, part of an overall earnings decline for parent company Mattel, the California toy company said late Thursday.

American Girl reported $88 million in revenue in the third quarter, down from $124.5 million for the 2016 third quarter.

Overall, Mattel — whose brands also include Barbie and Fisher-Price — said sales fell 13 percent in the three months that ended Sept. 30 compared with the same period last year. Mattel reported a net loss of $603 million for the quarter compared with a profit of $236 million for the 2016 third quarter.

Retailer Toys R Us’ bankruptcy filing in September played a role in the revenue decline for Mattel. The company said about half of its 22 percent drop in North American revenue was due to the Toys R Us bankruptcy.

American Girl, whose products began selling in Toys R Us stores in 2016, also took a hit from the bankruptcy, American Girl spokeswoman Julie Parks said.

The company said it plans to make structural changes to simplify the business and will cut $650 million in costs over the next two years. No immediate word was available on how that may affect American Girl, which has more than 2,300 year-round employees, including about 470 in Middleton.

American Girl sells upscale dolls, as well as books and accessories for dolls and girls.

The third-quarter results are “clearly disappointing,” Parks said. She said another factor affecting American Girl was last year’s franchise licensing deal, expanding the brand into the United Arab Emirates.

“That said, American Girl has been facing headwinds for the past several quarters, and we are continuing to work hard to stabilize the business,” Parks said.

She said American Girl’s efforts include “restoring the brand’s premium positioning with a renewed commitment to service and quality.” initiating personalized marketing technology, and freshening the company’s content and storytelling.

American Girl also plans to move its New York City flagship store to 75 Rockefeller Plaza, replacing its original New York City store that opened in 2003. The new, 40,000-square-foot store will open Nov. 11 with new options including a salon where girls and their dolls can get matching hairstyles and manicures, and girls can design their own dolls and doll outfits.

Expenses for the new store contributed to company costs for the third quarter, Mattel said.

For the first nine months of 2017, American Girl had $234.2 million in revenue, down 18 percent from $285.9 million for the same period last year.