Barbie dolls for sale in a Target store.
Scott Mlyn | CNBC
Shares of Mattel jumped as much as 20% in expanded trading Tuesday after the company had better results than expected for the third quarter and announced it would hire a new CFO.
The company also said auditors had completed the investigation into allegations that the company had made accounting errors in historical periods.
Auditors determined that income tax expense was undervalued by $ 1
will amend its 2018 Annual Report to reverse its financial results for the third and fourth quarters of 2017 and said it will work to identify weaknesses in internal control of financial reporting.
The warning letter had been published in August when Mattel was approaching a sale of senior notes in 2027. Shares fell sharply as investors reacted to Mattel having to stop the bond offer.
By packing up the investigation without finding Mattel can now go back and make another bond offer,
"We plan to return to the debt market to refinance the $ 250 million senior notes maturing in October 2020," said CFO Joseph Euteneuer during the earnings call.
Also on Tuesday, the company said that Euteneuer would step down from the position after a transitional period of up to six months. Mattel is now conducting a search for its next CFO.
"Joe has been a valued member of our leadership team since joining Mattel two years ago," Ynon Kreiz, Mattel's Chairman and CEO, said in a statement. "He has played a key role in our structural simplification program approaching completion, and has made meaningful contributions to the significant progress we have made in the first phase of our strategy to restore profitability."
Mattel said it made $ 70.6 million, or 20 cents a share, in the quarter, compared to $ 6.3 million, or 2 cents a share, the year before.
Excluding one-off items, the company earned 26 cents per share. Analysts had projected earnings of SEK 16 per share.
Revenue increased to $ 1.48 billion, beating an estimated $ 1.43 billion analysts had predicted, according to Refinitive.
The revenue stroke is good news for Mattel, who has been working on a strategic turnaround plan since bringing Kreiz to the helm in 2018. Still, brands like American Girl and Fisher-Price continue to weigh sales.
While Barbie sales increased by 10% during the quarter, American Girl sales fell by 14%. The company's infant, toddler and preschool category also saw sales decline of 11%.
Action figures, building sets and games saw a total growth of 12%, the company said. And the vehicle segment rose 13% during the quarter, with Hot Wheels sales up 25%.
Correction: Mattel plans to search for a new CFO. A previous headline incorrectly stated that a replacement had been found.