Mattel Inc. surprised the market Friday, returning to a first-quarter profit on the strength of core brands like Barbie and newly licensed toy lines such as Thomas and Friends. The results easily beat Wall Street's expectations.
The No. 1 U.S. toy maker earned $24.8 million, or 7 cents per share, for the three months ended Mach 31. That compares with a loss of $51 million, or 14 cents per share, a year earlier.
Revenue rose 12 percent to $880.1 million from $785.6 million, helped by increased sales of core brands such as Barbie, Hot Wheels, American Girl and Fisher Price. Newly licensed toy lines such as Worldwide Wrestling Entertainment and Toy Story also boosted results. The "Toy Story 3" movie is set to open during the summer.
Sales of Barbie, which is more than 50 years old, increased for the first time in nearly two years during Mattel's fourth quarter. The fashion icon's success, coupled with the newly licensed toy lines, gave Mattel its second straight quarterly profit increase.
Gross sales improved 12 percent both domestically and abroad.
The sales growth is encouraging, as it is significantly better than the company's 1 percent revenue increase in the fourth quarter and may indicate that shoppers are beginning to spend money again on nonessential items and becoming more comfortable with economic conditions.
A recovery in consumer spending is important since accounts for about 70 percent of total economic activity.
Aside from healthy sales growth, El Segundo, Calif.-based Mattel managed to cut costs during the quarter, lowering other selling and administrative expenses to $292.5 million from $317 million.
In the past year Mattel has cut jobs, improved its supply chain, reduced the number of items it is developing and slashed capital spending to offset weak sales.
The quarterly performance was much better than Wall Street's forecasts, as analysts polled by Thomson Reuters had predicted a loss of 3 cents per share on revenue of $859.9 million. These estimates typically remove one-time items.
Rival Hasbro Inc. will report their quarterly results on Monday.
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