Toy Maker Mattel Sued For Securities Fraud
WASHINGTON, DC (July 12, 2017) — U.S. Market Advisors Law Group PLLC announces that a class action lawsuit has been filed against Mattel, Inc. (“Mattel” or the “Company”) (NASDAQ:MAT) and certain of its senior executives. The class action is on behalf of investors who purchased or otherwise acquired Mattel common stock, seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934. The case has been docketed under 17-cv-04953 in United States District Court for the Central District of California.
If you are a shareholder who purchased Mattel securities between October 20, 2016 and April 20, 2017 (“Class Period”), you have until August 28, 2017 to ask the Court to appoint you as Lead Plaintiff for the class. The Lead Plaintiff is a representative for absent members of the class.
Investors do not need to seek appointment as Lead Plaintiff to share in any class recovery in this action. If you are a class member and there is a recovery for the class, you can share in that recovery as an absent class member. You may retain counsel of your choice to represent you in this action. Contact USMA Law Group to discuss this action.
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.
Allegations Against Mattel
According to the initial complaint, 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.
About USMA
U.S. Market Advisors Law Group PLLC is a national law firm based in Washington, D.C. The firm represents investors worldwide in U.S. securities class action lawsuits.
Contact
David P. Abel
(202) 274-0237
[email protected]