The company did not disclose to investors information about the decline in demand for Barbie dolls and Hot Wheels cars.
Toy maker Mattel is facing a class action lawsuit in the United States District Court for the Central District of California, filed on behalf of shareholders.
The cause of the March 6 lawsuit was the fact that the company "made false or misleading statements and failed to disclose material adverse facts regarding its business, operations and prospects." In particular, it is alleged that Mattel did not disclose to investors information about the decline in demand for Barbie dolls, Hot Wheels cars and some other products. As a result of this downturn, the company has accumulated excess inventory.
Shareholders were outraged by the fact that the company not only concealed these facts, but also presented extremely positive statements about its activities and prospects. The information provided was said to be "misleading and not based on reasonable grounds". In other words, despite the decline in sales, Mattel claims that everything is going well and will only get better. The plaintiffs demand damages in the amount established by the court.
The defendants named in the lawsuit include the company itself, CEO Ynon Kreiz and CFO Joseph Euteneuer. Mattel's management declined to comment on the resulting lawsuit, citing a "long-standing policy of not commenting on legal matters."
Recently, toy manufacturers are going through hard times. The world is becoming more and more virtual, and children dream more about a new smartphone or tablet than about a doll or a car. So, in 2018, the Toys “R” Us chain of stores, which specialized in the sale of toys, went bankrupt.