Mattel earnings rise on robust sales and new product lines
Fueled by robust sales of its core brands and new product lines, Mattel Inc. reported a surprisingly strong first-quarter performance Friday.
The world’s largest toy maker posted profit of $24.8 million, or 7 cents a share, compared with a loss of $51 million, or 14 cents, for the year-earlier period. Sales totaled $880.1 million, up 12% compared with $785.6 million a year earlier. In the U.S., first-quarter sales increased 12%.
“I was looking for a really big number and they delivered it, so that was impressive,” said Sean McGowan, a toy analyst at Needham & Co.
“I don’t think I’ve ever seen a positive surprise at such a high quality as this. Every component of the income statement came in better, and for good reasons and not some fluky thing. It’s a heck of a good start.”
McGowan said the El Segundo company’s strength came in part from more high-quality products and increased demand from consumers willing to spend a bit more on toys after cutting back during the recession.
“As consumers feel more comfortable, this is an area where they’ll likely bounce back spending more than other areas,” he said.
In a call with analysts Friday, Chief Executive Robert A. Eckert said Mattel’s first-quarter performance was boosted by new licensed properties including World Wrestling Entertainment and Thomas and Friends.
But he cautioned that retailers were still keeping inventories lean, which might affect the all-important holiday season.
“It’s nice to be off to a good start,” Eckert said. “That said, the first quarter is just that -- the first 90 days of the year -- and we still have a lot of work to do.”
Among Mattel’s core brands, Barbie, which had struggled in recent quarters and is a strong indicator of the company’s performance, saw sales increase 5%. Hot Wheels posted a 9% sales gain, core Fisher-Price toys were up 5% and American Girl brands saw sales rise 6%, Mattel said.
Sales in the company’s entertainment business, which includes games and puzzles, were up 35%. Toy analysts have said the industrywide improvement in traditional games and puzzles could be because budget-minded families are opting to hang out at home to save money.
Mattel shares rose 9 cents to $23.84.