Mattel plunges 18% as outlook disappoints investors

Shares of Mattel Inc. fell sharply Friday as the company released guidance that disappointed investors during a conference call.

A measure of earnings known as Ebitda, which excludes items such as taxes and interest, will be in a range of $350 million to $400 million this year, the company said in an investor presentation. Though the measure may not be comparable to existing estimates from analysts that project a higher amount, shares fell sharply after the guidance was released.

The disappointing outlook marks a reversal after good news late last week heartened investors following a tough year. On Feb. 7, Mattel reported a surprise adjusted profit as it continued to shake off the liquidation of major customer Toys “R” Us Inc. with the help of aggressive cost-cutting.

For years, Mattel had been criticized by investors for not shifting more toward entertainment, following such moves by rival toy companies Hasbro Inc. and Lego A/S. But Mattel Chief Executive Ynon Kreiz has been working to change that during his first year on the job, announcing new movies involving Barbie, Hot Wheels and, on Friday, American Girl.

Though Barbie and Hot Wheels are still seen growing this year, their momentum will slow from last year, the company said, and sales of its Thomas & Friends and American Girl lines are expected to decline.

Caitlin Noselli, an analyst with Bloomberg Intelligence, said investors were likely reacting to the flat sales forecast. “We were looking for some growth,” she said.

Shares fell about 18.3% to about $13.82 in New York, the stock’s biggest single-day decline since 1999. The stock had rallied 69% this year through Thursday’s close, and until Friday was the top-performing stock in the S&P 500 Index this year.