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Barbie, Mickey Mouse Put Mattel Toys Back in Black

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Times Staff Writer

With help from Barbie and Mickey Mouse, Mattel Toys on Tuesday said it earned $35.9 million last year--its first profit in two years.

The toy company said it had sales of $990 million last year, and a whopping 60% of its sales came from just three product lines--Barbie dolls, Hot Wheels cars, and Disney preschool toys. Barbie alone accounted for $450 million in sales as the 30-year-old teen-age fashion doll had its best year ever.

The profit came after a painful two years at Mattel during which the toy company closed factories and laid off workers to reduce costs and restore profits. The company cut 500 jobs at its headquarters in Hawthorne and shut 10 factories around the world.

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“Our return to profitablility is on course,” said John W. Amerman, chairman and chief executive. He said he looked for “improved performance in 1989.”

Gregory H. Kieselmann, a toy industry analyst with L. H. Friend & Co. in Los Angeles, said Mattel’s results were “at the high end of expections.” He said the company’s “emphasis on staple toys--Barbie and Hot Wheels--proved itself right. The question is, where do they go from here?”

Mattel’s sales last year were slightly lower than the $1 billion reported for 1987, in part because Mattel reduced the number of toys its sells by 150 to 650. Mattel lost $113 million in 1987.

In the fourth quarter of 1988, Mattel earned $10.5 million on sales of $288 million. In the fourth quarter a year earlier, Mattel lost $100.7 million on sales of $234 million.

Mattel’s recovery comes as the rest of the toy industry tries to recover from a slump. The Toy Manufacturers of America, an industry group, said this week that toys sales came to $12.75 billion last year, a slim 2% gain over 1987. Public toy companies, including Mattel, Hasbro and Tonka, together earned only $120 million last year, contrasted with a $120-million loss the previous year as children rejected faddish playthings and flocked to traditional toys.

Two victims of the industry’s malaise--Coleco, the maker of Cabbage Patch dolls, and Worlds of Wonder, the maker of talking Teddy Ruxpin--are in bankruptcy proceedings. Worlds of Wonder said on Tuesday that it is in discussions with an investment group that is interested in buying the troubled Fremont, Calif., toy maker.

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Mattel said it expects great things from Barbie again this year, along with increased sales of Hot Wheels, which racked up $100 million in 1988 sales, an 80% gain over 1987. Mattel said it is also counting on its preschool line, and it has increased the number of Disney preschool toys to 68 from 36. Kieselmann estimated that sales of Disney preschool toys could reach $100 million this year, up from $55 million in 1988.

One disappointment for the company last year was its electronic Wheel of Fortune game, which allowed home viewers to play along with the television game show. The toy was hampered by development problems and arrived on many toy store shelves too late for all-important Christmas sales. Mattel expects the toy to do better this year and is showing it to toy retailers at the annual Toy Fair this week in New York.

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