“Consumer discretionary companies knew they were in for a tough recession. As job losses mount, spending on the fun and frivolous is naturally the first to go. But recent corporate results show especially big drops in sales at outfits that cater to consumers’ sense of whimsy.
Take Mattel (MAT), one of the world’s largest toymakers, which reported earnings on July 17. Mattel’s sales fell 12% in the U.S. and, ignoring the impact of currency movements, 16% overseas. The company managed to beat earnings expectations—with earnings per share of 6¢—by slashing costs. But the economy took its toll.”