* 2nd-qtr earnings/share $0.21 vs est $0.32/share
* Net sales rise 1 pct to $1.17 bln vs est. $1.22 bln
* Barbie sales fall 12 percent
* Shares fall 6 percent
By Chris Peters
July 17Mattel Inc's quarterly results
offered further proof of the fading luster of the iconic Barbie
doll, as newer brands including the teen monsters of the
company's own Monster High line gained market share.
Mattel shares fell as much as 8 percent after the world's
biggest toymaker reported a much weaker-than-expected
second-quarter profit. Shares of smaller rival Hasbro fell 3
Sales of Barbie, long the company's mainstay, fell 12
percent in the second quarter, their fourth straight quarterly
decline. Sales of its Other Girls line, which includes Monster
High, rose 23 percent.
Sales of American Girl, its popular pre-teen line of chubby
faced dolls, grew 14 percent to $78.2 million in the period.
Chief Executive Bryan Stockton said Barbie was "likely being
modestly impacted" by the success of the company's newer
BMO Capital Markets analyst Gerrick Johnson estimated that
Monster High, which depicts the teenage descendants of classic
monsters such as Dracula and Frankenstein's Monster, has annual
sales of more than $500 million just three years into its
Barbie, a 54-year-old brand, has annual sales of about $1.3
billion, he said.
Johnson said the company has been offering promotions for
Barbie accessories and clothing, indicating waning interest in
"If kids are playing with a product line a lot, they will
want more accessories and fashions for Barbie," Johnson said.
"Accessories are always the first to go."
However, some analysts said Mattel's other doll brands were
more than offseting Barbie's decline.
"Barbie is down 7 percent in the first half, and totaled
$387 million in the first half. All other girls products (almost
entirely dolls) were up 33 percent in the first half, and
totaled $622 million," Needham & Co's Sean McGowan said.
"So, the total of Barbie plus other girls products was up 14
PLUNGE IN PROFIT
Barbie's weak sales also hurt the company's profit, which
fell 23 percent.
"(Barbie) makes up a higher portion of profits because it
has very high gross margins, no royalty expense, and efficient
advertising expenditures," McGowan said.
Total costs rose 9 percent to $505 million in the second
quarter as the company geared up for the second half of the
year, when it gets about two-thirds of its sales.
Mattel, which also makes Hot Wheels cars and Fisher-Price
baby toys, had said it expected spending to be higher this year
than last year as it invests in the new franchises, emerging
markets and American Girl stores.
The more expensive American Girl line, which Mattel acquired
in 1998, is sold through its own stores or through its website,
compared with its other brands that primarily sell through
retailers such as Wal-Mart, Target or Toys R Us
Overall sales rose 1 percent to $1.17 billion, missing the
average analyst estimate of $1.22 billion.
But, analysts said the company was still doing better than
others in the toy industry.
Wells Fargo analyst Timothy Conder said Mattel's retail
share gains appeared to have continued in the United States and
five key European markets.
The company's second-quarter net income fell to $73.3
million, or 21 cents per share, from $96.2 million, or 28 cents
per share, a year earlier.
Analysts on average were expecting earnings of 32 cents per
share, according to Thomson Reuters I/B/E/S.
Sales at its main Girls & Boys Brands unit, which includes
Barbie, rose 1 percent to $792.4 million during the quarter.
"Our girls portfolio continues to be the engine that's
fueling our global growth," CEO Stockton said about the unit
that generates about 40 percent of the company's revenues.
Sales of toy cars, including the Hot Wheels and Matchbox
brands, fell 6 percent, while sales of pre-school brand
Fisher-Price fell 3 percent.
The company also increased its share repurchase program by
Mattel shares, which have risen 26 percent this year, fell 6
percent to $43.44 in early trading on the Nasdaq. Shares of
Hasbro, which is due to report its results on July 22, fell 2
percent to $46.12.