Mattel Posts Surprise 1Q Profit, Helped by Barbie

April 16, 2010
Revenue rises 12%, with increased sales in all categories

Mattel Inc. surprised the market Friday, returning to a first-quarter profit on the strength of core brands like Barbie and newly licensed toy lines such as Thomas and Friends. The results easily beat Wall Street's expectations.

The No. 1 U.S. toy maker earned $24.8 million, or 7 cents per share, for the three months ended March 31. That compares with a loss of $51 million, or 14 cents per share, a year earlier.

Revenue rose 12% to $880.1 million from $785.6 million, helped by increased sales across all categories.

Barbie sales rose 5% -- the second straight quarter of a sales increase for the 50-year-old fashion icon after nearly two years of decline -- while sales of Hot Wheels rose 9%. Newly licensed toy lines such as Worldwide Wrestling Entertainment and Toy Story helped sales in Mattel's entertainment division rise 35%. The "Toy Story 3" movie is set to open during the summer.

Fisher Price sales rose 5%, helped by the Thomas and Friends line, and American Girl sales rose 6%.

Gross sales improved 12% both domestically and abroad.

The sales growth is encouraging, as it is significantly better than the company's 1% revenue increase in the fourth quarter and may indicate that shoppers are beginning to spend money again on nonessential items and becoming more comfortable with economic conditions.

A recovery in consumer spending is important since accounts for about 70% of total economic activity.

Aside from healthy sales growth, El Segundo, Calif.-based Mattel managed to cut costs during the quarter, lowering other selling and administrative expenses to $292.5 million from $317 million.

In the past year Mattel has cut jobs, improved its supply chain, reduced the number of items it is developing and slashed capital spending to offset weak sales.

The quarterly performance was much better than Wall Street's forecasts, as analysts polled by Thomson Reuters had predicted a loss of 3 cents per share on revenue of $859.9 million. These estimates typically remove one-time items.

Copyright 2010 The Associated Press

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