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Mattel surges after it reports 41% growth in operating income

Key Points
  • Mattel reported earnings and revenue that fell shy of analyst projections.
  • But the toymaker reported year-over-year operating income growth of 41 percent.
  • Chairman and CEO Ynon Kreiz said this is a sign of Mattel's progress on profitability.
A customer browses the Mattel Barbie dolls section of a now closed Toys 'R' Us store.
Chris Ratcliffe | Bloomberg | Getty Images

Mattel shares leaped 6 percent after hours Thursday after the company reported a third-quarter profit ahead of the all-important holiday season.

Here's how the company did compared with Wall Street expectations:

  • Earnings: 18 cents per share, vs. 20 cents per share forecast by Refinitiv
  • Revenue: $1.44 billion vs. $1.49 billion forecast by Refinitiv

Although its third-quarter results fell short of projections, they signal Mattel's progress on profitability. In the year-ago quarter, Mattel reported an adjusted loss of 4 cents per share on $1.56 billion in revenue.

Mattel Chairman and CEO Ynon Kreiz said it was the "first time in eight quarters that we have posted year-over-year growth" in operating income. The company reported third-quarter operating income of $121.9 million. That translates to 41 percent growth from $86.2 million in the comparable year-ago period.

For North America, Mattel said its sales increased 4 percent year over year, the highest sales growth for the region since the fourth quarter of 2015.

The company also noted that its sales saw a negative 3 percent impact from the liquidation of Toys R Us. It said it also saw a negative 3 percent impact from the slowdown in its China business.

Earlier this week, rival Hasbro said new retail partners have emerged to fill the void left behind by Toys R Us, but these companies stock their shelves later in the year. Hasbro explained that the now bankrupt Toys R Us traditionally placed toys earlier in the third quarter. That difference in timing contributed to a 17 percent decline in U.S. retail inventories for Hasbro.

WATCH: The rise and fall of Toys R Us

The rise and fall of Toys R Us