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Business

Barbie dolls up the bottom line

Wednesday, July 18, 2012



NEW YORK, USA - IT was a doll of a quarter for Mattel.

Demand for doll brands including Barbie, American Girl and Monster High, coupled with lower sales costs and advertising expenses, helped the biggest US toy maker's net income rise 20 per cent in the second quarter.

The results for a seasonally slow period for toy companies beat Wall Street estimates. It's a positive sign as the company heads into the second half of the year, which includes the all-important holiday season and contributes the bulk of its sales, particularly since analysts were expecting net income to decline.

The news sent shares up more than six per cent in pre-market trading.

Mattel, which also makes Hot Wheels and Fisher-Price toys, said yesterday that its net income rose to US$96.2 million ($8.5 billion), or 28 cents per share, in the April to June quarter. That compares with US$80.5 million, or 23 cents per share, a year ago.

That beat the 20 cents per share that analysts surveyed by FactSet expected.

"We delivered solid performance as we continued to build momentum with key brands, such as Barbie, Monster High, American Girl and Hot Wheels, as well as the Batman — The Dark Night Rises property, despite a continued cautious global retail environment and a strengthening US dollar," CEO Bryan Stockton said in a statement.

Revenue held at US$1.16 billion, but topped Wall Street's estimate of US$1.13 billion.

Its shares rose US$1.96, or 6.3 per cent, to US$32.62 in pre-market trading. Its shares have been trading near the high end of their 52-week range. Mattel shares peaked at US$34.62 per share in late March.

Mattel looked to combat the seasonal sales slowness — and continued high costs for commodities like packaging and fuel — by reducing some of its costs. The company's cost of sales declined to US$564.2 million from US$605.5 million, while advertising and promotion expenses were cut to US$112.4 million from US$116.2 million.

Sales of Hot Wheels climbed 11 per cent, while Barbie sales rose five per cent. Fisher Price sales increased two per cent thanks to Fisher-Price Friends, Disney's Jake and the Never Land Pirates and the acquisition of HIT Entertainment. American Girl sales gained three per cent mostly because of strong sales of the 2012 Girl of the Year, McKenna.

Worldwide sales of Mattel's other girls brands, which includes Monster High, soared 96 per cent.

The entertainment segment, which includes Radica and games, posted a 36 per cent sales decline as shoppers purchased fewer Cars 2 products. The movie Cars 2 was in theaters last summer. Toys tied to movies typically sell the most amount of products closer to the period that the movies are in theatres, with sales falling afterward.

Mattel, which is based in El Segundo, California, also declared a third-quarter dividend of 31 cents per share. The dividend will be paid on September 21 to shareholders of record on August 29.



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