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Mattel shares pounded as the toy maker's woes continue; cuts 2,200 jobs

The loss of its biggest customer, Toys 'R' US, has really hit the company hard
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The majority of the job losses will be back-office, according to the company

Mattel Inc (NASDAQ:MAT) shares sank more than 6% Thursday as the toy maker's woes continue. Its quarterly earnings missed analysts' expectations and it announced it was axing thousands of jobs.

The bankruptcy of its biggest customer, Toys 'R' US, really hit the Barbie-maker hard, losing it 10% of its sales in the second quarter.

This coupled with sluggish sales of its brands like Fisher-Price and Hot Wheels, as youngsters opt for electronic alternatives, has compounded problems.

Job cuts

Now the company has announced that 2,200 jobs are to be cut, or 22% of the global non-manufacturing workforce, as part of its cost-savings plan unveiled last October aimed at saving US$650mln over two years. The vast majority of the job cuts are back-office and support roles, according to the company.

The bottom line in the three months to end June was an increased net loss to US$240.9mln, or US$0.70 per share, from US$56.1mln, or US$0.16 per share, a year earlier.

That was on sales, which fell 13.7% in the quarter to US$840.7mln, which was less than the US$851.8mln, which analysts had expected.

Mattel CEO Ynon Kreiz reportedly said on a conference call that he hopes the company can realign resources toward high-performing toys, improving online sales and developing better toy franchises for the future.

"We see a lot of opportunities, but there has been a big discrepancy between our financial performance over the last few years and where the company should be," he said.

Shares fell 6.4% to US$15.25 in New York.

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