Mattel Shares Slashed To Sell At Argus

In a report published Tuesday, analyst John Staszak of Argus downgraded

from Hold to Sell. The fair value was set to $24. The downgrade was based on the currently weak outlook for the company. Mattel reported a decline in its sales for 1Q, making the sixth consecutive quarter of decline, while inventories continued to rise. According to Staszak, "Management has worked to reduce inventories and revive sales by improving brand recognition and introducing new products, but has yet to achieve the expected improvement." Although at present Mattel owns the rights to produce and sell dolls based on the characters based on "Frozen" and "Disney Princess,"

had entered into an agreement to allow

to manufacture the "Disney Princess" dolls from 2016. Hasbro is one of Mattel's main competitors. The loss of the rights to the "Disney Princess" dolls is likely to lead to revenue losses for Mattel. In addition, Argus said, "We have been concerned about sluggish sales of the Barbie and Fisher Price brands for some time. Both of these key brands have reported weak revenue over the past two years. In addition, sales of American Girl dolls were lower in the second half of 2014 and flat in 1Q15." While the company's management continues to work on achieving a turnaround, Staszak believes that it could take some time before the impact is seen in terms of improved sales and earnings.