* Earnings of $1.12/share before items vs $1.15 Wall Street
* Sales also miss estimates in fourth quarter
* Barbie sales down 4 percent worldwide
* Prices up by low single digits globally effective Jan. 1
By Dhanya Skariachan
Feb 1 Mattel Inc, the maker of Barbie
dolls and Hot Wheels cars, is raising prices globally as it
looks to rebound from a lackluster holiday selling season
plagued by concerns about the U.S. economy.
Friday's news helped the No. 1 toymaker's shares recover in
morning trading. They rose about 1 percent to $38.55, their
highest level since 1998, after falling as much as 2.3 percent
to $36.75 earlier in the session.
While Mattel missed Wall Street's profit and sales estimates
for the fourth quarter on weak demand for its mainstay Barbie
and some games, it reassured investors about its margin
prospects by talking about cost cuts and the global Jan. 1 price
increase, which it said was in a low single-digit percentage
Despite the sales miss, Mattel still appears to have gained
market share from smaller rivals such as Hasbro Inc in
the United States and nearly a half-dozen European markets,
Last month, Hasbro had warned its fourth-quarter revenue
might fall far short of analysts' estimates because of
weaker-than-expected demand in what is typically the biggest
selling season of the year.
"The retail environment was very difficult in the fourth
quarter," said MKM Partners LLC analyst Eric Handler.
U.S. shoppers held back a bit during the 2012 holiday
season, spending only 3 percent more than 2011 because of
concerns about the economy, the National Retail Federation has
Sales of Barbie products fell 10 percent in North America in
the fourth quarter, which Handler said was the steepest decline
for the brand in several years.
But some of the weakness in the Barbie brand stems from the
rising popularity of other Mattel dolls, such as Monster High,
which appeared on many hot toy lists in 2012, Needham analyst
Sean McGowan said.
"To some extent, Monster High is taking a lot of business
from a lot of dolls," McGowan said. Barbie "just ran into its
Both analysts expect Mattel to have a better 2013. Handler
tied his optimism to the company's strong product lineup and the
slowly recovering global economy.
Hasbro's lack of entertainment-themed toys could hurt its
prospects in the near term, said Handler, who rates Mattel
shares as "buy" and Hasbro as "neutral."
It will be another two years before the release of another
"Transformers" movie, which is based on a Hasbro brand, Handler
Hasbro plans to report its fourth-quarter results on Feb. 7.
WEAK SALES GROWTH
Mattel, also home to Hot Wheels cars and Fisher-Price toys,
said its net income had fallen to $306.5 million, or 87 cents a
share, from $370.6 million, or $1.07 a share, a year earlier.
Excluding a litigation charge, the company earned $1.12 a
share, missing the analysts' average estimate of $1.15,
according to Thomson Reuters I/B/E/S.
Net sales rose 5 percent to $2.26 billion, and fell short of
the analysts' average estimate of $2.29 billion.
Global sales of Barbie products fell 4 percent. Sales at
Mattel's entertainment business, which includes electronic
games, were down 13 percent, mainly on weak demand for "Cars 2"
Also on Friday, Mattel announced a first-quarter cash
dividend of 36 cents a share. That reflects an annualized payout
of $1.44 a share, which would be up 16 percent from last year.