Mattel, Jakks Profits Beat Quarterly Forecasts
Mattel Inc. and Jakks Pacific Inc. on Thursday reported better-than-expected quarterly earnings, bucking a depressed retail environment that worsened following the Sept. 11 terrorist attacks.
The two Southland-based toy companies’ relative strength supports a long-held toy industry truism: When Americans cut spending in response to a rocky economic climate, they will continue to buy for their children.
That also bodes well for the all-important fourth quarter, when toy companies can bring in more than half of their annual revenues.
“Historically, toy sales tend to be more dependent on product offering than the economy,” said Melissa Comer Williams, an analyst with Gerard Klauer Mattison in New York. “And the product offering is a lot more compelling this year, with Harry Potter and a number of other products that kids want.”
El Segundo-based Mattel, the world’s largest toy maker, reported strength worldwide in sales of its Hot Wheels boys’ toys and core Fisher-Price infant and toddler products. Although sales gained slightly, up 1.8% to $1.61 billion, much of the company’s earnings gain came from earlier cost-cutting measures that led to an improvement in gross profit margins.
Since Mattel Chief Executive Robert Eckert took over last year, the company has shuttered North American facilities, eliminated jobs, discontinued under-performing licenses, streamlined supply-chain operations and divested itself of the money-draining Learning Co. interactive software division.
Those changes, Eckert said Thursday, propelled the company to a 19.2% earnings gain compared with last year, to $207.6 million from $174.3 million, not including one-time charges.
Mattel’s girls division, which includes Barbie and American Girl dolls among other products, saw a sales gain of 1% worldwide, mostly on the strength of the company’s newer offerings, such as Polly Pocket dolls and What’s Her Face, a new create-a-doll product.
Sales of Barbie, the company’s most enduring brand and among its highest-margin toys, fell 9%, a loss Eckert attributed to a decline in sales of adult-collector dolls, which more closely follow overall retail sales, and to retailers’ plans to keep fewer dolls on hand.
Sales of Fisher-Price baby and toddler toys, excluding the company’s Sesame Street and other character toys, were up 8% worldwide; boys and entertainment products gained 5% worldwide.
For the three months ended Sept. 30, Mattel reported earnings per share of 48 cents before one-time charges, better than the 46-cents estimate of analysts polled by Thomson Financial/First Call.
Mattel’s net sales for the period rose to $1.61 billion, versus $1.58 billion a year ago.
Including restructuring and other special charges, Mattel reported earnings of $199.8 million, or 46 cents a share, up from a year-ago loss of $336.9 million, or 79 cents a share, primarily stemming from losses related to the Learning Co. division.
Malibu-based Jakks, maker of World Wrestling Federation action figures and Pentech pens, reported a gain in operating earnings of 12.1% over a year ago, to $10.9 million or 56 cents a share, versus $9.8 million, or 48 cents a share, a year ago.
Net sales for the company rose slightly to $92.8 million, from $91.8 million for the third quarter of 2000.
Jakks’ stock gained $2.20 to close at $18.30 on Nasdaq. Mattel shares rose 79 cents to $18.29 on the New York Stock Exchange.
At a Glance:
Other California company earnings, excluding one-time gains and charges unless noted:
* Callaway Golf Co., the Carlsbad-based golf-club maker, said third-quarter net income fell 67% and that profit this year may be less than analysts’ expected. Profit fell to $6.5 million, or 9 cents a share, from $20.1 million, or 29 cents, in the year-earlier quarter. Sales fell 6% to $195.8 million. The company expects profit in 2001 of $1.01 to $1.06 a share on sales of $800 million to $820 million.
* Cheesecake Factory Inc., the Calabasas Hills-based restaurant operator, reported third-quarter net income of $9.7 million, or 20 cents a share, compared with $8.5 million, or 17 cents, a year ago. Revenue rose 23% to $129.0 million.
* Indymac Bancorp, the Pasadena-based holding company of Indymac Bank, reported third-quarter net income of $34.5 million, or 55 cents a share, compared with $23.5 million, or 35 cents, a year ago. Revenue rose 53% to $133.0 million.
* Calabasas-based On Assignment Inc. said third-quarter profit fell 20% as the temporary employment company for health care said clients slowed hiring as the U.S. economy slumped.
Net income fell to $4.06 million, or 18 cents a share, from $5.1 million, or 22 cents, a year earlier, just missing estimates. Revenue fell 8.2% to $46.9 million.
* Los Angeles-based Reliance Steel & Aluminum Co. reported a 50% decrease in third-quarter net income to $7.8 million, or 25 cents a share, compared with $15.8 million, or 57 cents, a year ago. Revenue fell 3% to $430.1 million.
* Video game publisher THQ Inc., based in Calabasas Hills, reported third-quarter net income of $3.2 million, or 14 cents a share, compared with $1.3 million, or 6 cents, a year ago. Revenue rose 28% to $68 million. The company cited strong sales for the Game Boy Advance hand-held platform.
