On the flip side, we had a few holdings that underperformed. Toy manufacturer, Mattel, Inc. (NASDAQ:MAT) declined -27.44% during the period. Early in the quarter, the company reported disappointing earnings results. While company revenues were in-line with expectations, gross margins were disappointing. Another headwind to the stock was the mid- September announcement that Toys”R”Us was filing for bankruptcy, which sent shockwaves through the toy market. In our opinion, Toys”R”Us’ bankruptcy will have little long-term impact on Mattel. Toys“R”Us represents approximately 11% of Mattel’s total sales. In the short-term, the impact should be reflected in fourth quarter sales for Mattel, but those numbers will probably result from softness across the board, not from Toys“R”Us specifically. Likewise, we have strong conviction that the company’s global reach and proven consistency makes it the licensee of choice for brand owners seeking a toy-manufacturing partner.
From John Rogers (Trades, Portfolio)' Ariel Appreciation Fund third-quarter 2017 shareholder commentary.
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