* Third-quarter earnings per share $1.04 vs Wall St view
* Sales up 4 percent at $2.08 billion vs Wall St view $2.07
* CEO pleased with inventory levels heading into the
* Shares up 4.3 percent
By Dhanya Skariachan
Oct 16 Mattel Inc reported a
higher-than-expected quarterly profit on Tuesday as the world's
largest toy company benefited from raising prices and keeping a
tight rein on costs.
The news, which comes as Mattel heads into the all-important
holiday selling season, boosted its shares to their highest
level since 1998. Smaller rival Hasbro Inc is due to
report its quarterly results next week.
Mattel, the maker of Barbie dolls and Hot Wheels cars, had
increased prices at a mid-single-digit percentage rate on Jan. 1
to offset higher costs for materials, labor and transportation.
Strong sales of its Fisher-Price, Monster High and American
Girl products also helped Mattel in the third quarter.
Chief Executive Officer Bryan Stockton said the company was
well-positioned for the biggest selling season of the year.
"We feel good that inventory levels, both at Mattel and at
our retail partners, position us well for success in the holiday
season," said Stockton, who replaced long-time CEO Robert Eckert
at the end of last year.
Mattel shares were up 4.3 percent at $36.95 on Nasdaq after
touching a high of $37.20 earlier in the session.
Wells Fargo analyst Tim Conder said Mattel's gross margin of
53.7 percent was above his estimate of 50.2 percent and the
larger Wall Street projection of 50.7 percent.
Besides the price increases, margins benefited from
manufacturing efficiency programs and a shift toward the
company's intellectual properties, particularly in dolls.
Toy companies like Mattel are increasingly trying to own
more intellectual property so they can generate revenue by
merchandising and licensing it.
Currency fluctuations accounted for a third of the
improvement in gross margin, Chief Financial Officer Kevin Farr
said. A stronger dollar had dented Mattel's margins
significantly in the year-earlier period.
Net income rose to $365.9 million, or $1.04 per share, from
$300.8 million, or 86 cents per share, a year earlier. Analysts
on average had expected 99 cents per share, according to Thomson
Sales rose 4 percent to about $2.08 billion, while analysts
expected $2.07 billion. The cost of sales, which includes input
and direct labor costs, fell 8 percent to $962.4 million.
Sales rose 6 percent for the Fisher-Price brand and 16
percent for American Girl, but fell 4 percent for Barbie.
Stifel Nicolaus analyst Drew Crum said the Barbie sales
numbers were disappointing, but otherwise called the earnings
report "a positive update entering the seasonally important
Mattel sells toys through retailers such as Wal-Mart Stores
Inc, Toys R Us Inc and Target Corp as
well as through its own catalog and website.