Mattel, Inc. Securities Class Action
Company: Mattel, Inc. (NASDAQ:MAT)
Class Period: October 20, 2016 – April 20, 2017
Lead Plaintiff Deadline: August 28, 2017
Court: Central District of California, No. 17-cv-04953
WASHINGTON, DC (July 12, 2017) — U.S. Market Advisors Law Group PLLC announces that a class action lawsuit has been filed on behalf of purchasers of Mattel, Inc. common stock between February 6, 2015 and October 29, 2015. The lawsuit seeks to recover damages for Mattel investors under the federal securities laws.
Any member of the putative class may move the Court to serve as lead plaintiff through attorneys of their choice, or may choose to do nothing and remain an absent class member. The lead plaintiff will direct the litigation and participate in important decisions including whether to accept a settlement for the class in the action. The lead plaintiff will be selected from among applicants claiming the largest loss from investment in Mattel securities during the relevant period. Members of the class will be represented by the lead plaintiff and attorneys chosen by the lead plaintiff.
If you wish to choose attorneys to represent you and the class, you must apply to be appointed lead plaintiff no later than August 28, 2017. If you wish to join the litigation, complete the contact form below to be contacted by an attorney to discuss your rights or interests regarding this class action. There is no obligation or cost to you.
About the Lawsuit
Mattel designs, manufactures, and markets a broad variety of children’s toy products on a worldwide basis. The Company sells its products to retailers and directly to consumers. Mattel’s products include branded fashion dolls, infant and preschool products, toy cars, and electrical vehicles.
According to the Complaint, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (i) prior to and during the Class Period, Mattel’s retail customers were loaded with extremely high levels of unsold Mattel product; (ii) as a result of Mattel’s unusually high levels of unsold inventory at its retailers, Mattel was exposed to the heightened risk that it would have to issue its retailers financial concessions (in the form of sales adjustments, discounts and promotions) to remove such excess inventory, as well as the heightened risk that Mattel would experience slower sales growth in future periods; and (iii) as a result of the foregoing, Mattel’s public statements were materially false and misleading at all relevant times.
On January 25, 2017, when Mattel announced its Q4 2016 and year-end results, defendants, as detailed herein, disclosed adverse facts associated with the Company’s inventory and the price of Mattel stock fell approximately 18%, or $5.57 per share, on heavy trading volume to close at $25.99 per share.
On April 20, 2017, post-market, Mattel issued a press release announcing its Q1 2017 financial results for the period ending March 31, 2017. For the quarter, the Company reported that, on a year-over-year basis, worldwide net sales and gross margins each declined by more than 15%, and its operating loss increased by more than 158% to $127.0 million from $49.1 million.
Defendants, however, continued to mislead the market by downplaying the significance of the amount of retail inventory existing at the end of Q4 2016.
Mattel’s Q1 2017 results took securities analysts by surprise and were significantly below Wall Street consensus estimates. In fact, Mattel’s 15% net sales decline during the quarter was twice the 7.8% decline expected by Wall Street analysts and its reported Q1 2017 gross margins were 520 basis points less than expected Wall Street consensus estimates. Moreover, Mattel’s revenue decline during Q1 2017 was well above the “mid to high single digit” decline propounded by defendant Farr at Mattel’s Toy Fair on February 17, 2017, when Q1 2017 was more than half complete.
Upon these revelations, the price of Mattel stock fell nearly 14%, or $3.42 per share, on heavy trading volume to close at $21.79 per share on April 21, 2017.