Record Sales Send Mattel’s Profit Up 26%
Citing help from Barbie and a strong performance in foreign markets, Mattel Inc. reported Thursday that record sales drove its third-quarter earnings up 26% to $47.8 million.
The Hawthorne-based company said sales for the three months ending Sept. 29 totaled $490 million, compared to $410 million for the same period in 1989. The third period is crucial to toy and game manufacturers because it marks the first half of retailers’ Christmas buying season.
The surge for Mattel, the No. 2 U.S. toy maker in terms of sales, came during a period of economic uncertainty for the industry. Wall Street analysts said industrywide sales this year have been relatively flat. With a 38% increase in foreign sales during the third quarter and a traditionally strong presence abroad, Mattel would be buoyed during a further slowdown in the U.S. economy, said Gary Jacobson, an analyst at Kidder, Peabody in New York.
“Domestically, the toy industry is facing very sluggish demand,” Jacobson said. “On the international front, business is booming, and Mattel is being helped by the weaker (value) of the U.S. dollar in world markets.”
The weaker dollar makes Mattel products less expensive and more competitive abroad, but many buyers in the United States and Europe are also lured by some of the toy maker’s newer products, said John W. Amerman, Mattel’s chairman and chief executive.
Among the sales leaders are Magic Nursery dolls. The large toy is packaged in a hospital gown that dissolves in water, leaving underlying clothing and a card bearing information on the doll’s sex. The Disney Preschool line of toys, introduced in 1988, also is enjoying strong sales, Amerman said.
However, Barbie--introduced 31 years ago--is still the biggest financial boon to Mattel. A 30% increase in foreign sales of Barbie dolls helped boost the foreign portion of sales to 55%, Amerman said. Typically, about 50% of Mattel’s business stems from foreign sales.
“This shows that we’re gaining market share around the world,” Amerman said. “Our competitors are having more difficulty. . . .Our products are well-suited for international consumers.”
Barbie sales, which account for about 45% of all of Mattel’s annual business, are surging because other toy makers are concentrating more of their resources on toys and games for boys, said Carol Palmer, an analyst at Duff & Phelps in Chicago.
“There has been less competition in girls’ lines,” she said.
Palmer said Mattel has outperformed industry expectations. She said it is now gaining on Hasbro, the No. 1 U.S. toy maker. Hasbro reported an earnings increase of 6% in the third quarter, but its sales have not been rising as rapidly as Mattel’s.
