Mattel Faces Lawsuit Over Information about Barbie and Hot Wheels Sales

Mattel has been crying wolf, and may have been finally caught by their investors.  They are facing a class action lawsuit in the United States District Court for the Central District of California on behalf of shareholders alleging that the company “made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects,” according to a March 6 court filing.

The long and short? Mattel has been claiming that their sales have been increasing in a post-Toys R Us world. However, when asked for that information from their investors, they were unable to produce those numbers. The toy giant reported that Barbie gross sales rose 12% year over year, the doll’s fifth-straight quarter of growth and its highest full-year gross sales in the last five years, Mattel said. Its Hot Wheels brand’s fourth quarter gross sales, meanwhile, rose 9% and reached its own highest full-year gross sales in its history.

However, their investors claim that demand is declining and that Mattel has been untruthful.

Specifically, the suit claims that the company failed to disclose to investors that demand for Barbie and Hot Wheels and other products was declining, that Mattel had an excess of inventory, and that, therefore, its “positive statements about the Company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis,” according to the documents.

Specifically, the suit claims that the company failed to disclose to investors that demand for Barbie and Hot Wheels and other products was declining, that Mattel had an excess of inventory, and that, therefore, its “positive statements about the Company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis,” according to the documents.

 

SOURCE: Retail Dive

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