Business

Mattel posts small profit, but sales fall again despite Barbie’s strong showing

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Dozens of Mattel’s Barbie dolls gather at the Toy Fair in New York on Feb. 20, 2018.
(Mark Lennihan / Associated Press)

Mattel Inc. eked out a small profit in the third quarter, but the troubled toymaker, its problems exacerbated by Toys R Us’ demise and softer demand in China and Europe, said its quarterly sales again fell from a year earlier.

The El Segundo company’s flagship Barbie line of dolls continued to be the bright spot with higher sales, but its Hot Wheels, Fisher-Price and American Girl brands again suffered year-over-year sales declines.

Under the guidance of Ynon Kreiz, who was named chief executive in April, Mattel is undergoing a restructuring effort to slash expenses, bolster sales and end losses. The company in July said it was eliminating more than 2,200 jobs as part of a $650-million cost-cutting plan announced last year.

“We are on track with the execution of our strategy and have made meaningful progress toward restoring profitability,” Kreiz said in a statement Thursday.

“In the quarter, we achieved operating income of $122 million, up 41% versus the same period last year, which is the first time in eight quarters that we have posted year-over-year growth.”

Mattel posted net income of $6.3 million, or two cents a share, compared with a $603.3-million loss a year earlier that included a major tax-related charge.

After adjustments for restructuring charges, severance costs and other items, net income in the quarter ended Sept. 30 was 18 cents a share, which fell just short of analysts’ average forecast of 20 cents, according to FactSet.

Mattel’s quarterly sales of $1.44 billion also missed analysts’ estimate of nearly $1.5 billion. Mattel’s sales fell 6% from a year earlier when adjusted for currency fluctuations, which the company blamed partly on the liquidation of retailer Toys R Us earlier this year.

Hasbro Inc., Mattel’s primary rival, earlier this week also cited the loss of Toys R Us for a 12% drop in its third-quarter sales. Both companies are working to find enough alternative retailers to make up for the loss of Toys R Us’ outlets.

Mattel said its international sales tumbled 14% from a year earlier after currency adjustments, driven mainly by lower sales in China and Europe.

But Mattel said its North American sales, led by Barbie, rose 4% despite the Toys R Us-related problems, which apparently cheered investors.

Mattel’s results were announced after regular stock-market trading, during which Mattel’s stock gained 3% to $13.84 a share. The stock then jumped an additional 7.7% to $14.90 a share in after-hours trading.

Sales of Barbie products rose 17% worldwide to $374.7 million in the quarter. But sales of Hot Wheels toys fell 3% from a year earlier, sales of Fisher-Price and Thomas & Friends brands fell 10% and American Girl sales tumbled 31%. All the sales changes were adjusted for currency fluctuations.

james.peltz@latimes.com

Twitter: @PeltzLATimes