Mattel found itself caught in the fallout of Toys R Us’ bankruptcy, with the maker of Barbie dolls reporting lackluster third-quarter results that sent its shares tumbling by double digits.
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 was 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.”
The news sent Mattel’s stock, traded on the New York Stock Exchange, plummeting by as much as 24 percent after the bell, before it pared some of those losses to trade down by 16 percent.
Toys R Us is one of the world’s largest retailers, and therefore a significant seller for all toy companies. According to Jefferies, the retailer comprised 11 percent, 9 percent and 15 percent of 2016 global sales for Mattel, Hasbro and Jakks Pacific respectively.
In the weeks leading up to the filing, many vendors had stopped shipping their products, out of fear being left empty-handed.
Hasbro earlier this week said said the filing had also hurt its sales and profit.
Still, good news for the industry may be on the way, as many of the top toy companies appear to be working with Toys R US as it looks to reemerge from bankruptcy protection. Attorneys for Toys R Us said this week that most major vendors have resumed shipping to the company.
As for Mattel, it said it is “taking bold steps to simplify business and right size cost structure in alignment with our strategy.”