Mattel 3Q results beat expectations
NEW YORK -- Mattel says that cost cuts and higher revenue from toys including Monster High dolls and Fisher-Price helped send net income up 22 percent in the third quarter, providing a bit of early holiday cheer for the largest U.S. toy maker.
The results topped Wall Street expectations and sent its shares 3 percent higher in morning trading Tuesday.
They also indicate that Mattel is outperforming its rivals so far as it heads into the crucial holiday season, when toy makers can earn up to 40 percent of annual revenue.
CEO Bryan Stockton said the quarter shows the company is "building momentum in the marketplace through share gains and strong shipments across our portfolio of brands and countries." But he said the company is solidly focused on the holidays.
"With the holidays still in front of us, we remain focused on executing our business and driving retail sales in the all-important holiday season," he said.
There was one lump of coal: The stronger dollar and tough competition in the doll aisle was a drag on Barbie, usually one of Mattel's top performers. Revenue from that brand fell 4 percent. But Mattel's other doll brands' revenue surged, including Monster High, its hit line of monster-inspired dolls, and American Girl dolls.
The holidays are expected to be a tough battleground for toy makers, with retailers ordering inventory cautiously. In addition, retailers including Wal-Mart, Kmart and Toys R Us have beefed up layaway and reservation services to encourage shoppers to buy toys early in the season, meaning they might be scarce later on.
But Stockton reassured analysts in a call with investors that he was satisfied with inventory levels and early layaway programs.
"Our belief is (early layaway) is positive for the toy industry, particularly higher-priced toy items, and may help drive incremental traffic," he said. "We feel good that inventory levels, both at Mattel and at our retail partners, position us well for success is the holiday season."
Mattel's net income was $365.9 million, or $1.04 per share, for the period ended Sept. 30. That's up from $300.8 million, or 86 cents per share, a year ago.
Analysts expected 99 cents per share, according to a poll by FactSet.
Revenue for the El Segundo, Calif.-based company rose 4 percent to $2.08 billion, topping Wall Street's estimate of $2.07 billion.
Fisher Price sales increased 6 percent, while American Girl rose 16 percent. Sales of Hot Wheels were flat. Mattel reported strong sales of Monster High products, while sales of games tied to the "Cars 2" movie fell.
Revenue climbed in North America and abroad, with international results pressured by the stronger dollar.
Cost of sales fell 8 percent during the quarter as the company continued a cost-cutting program and streamlined design and manufacturing processes.
Smaller rival Hasbro Inc., which makes Monopoly, Nerf and My Little Pony, reports its results on Monday.
Shares rose $1.78, or 5 percent, to close at $37.20 after rising as high as $37.31 Tuesday, their highest level in more than a decade.
AP Writers Michelle Chapman and Candice Choi contributed to this report.