April 25, 2019 / 8:49 PM / 4 months ago

Mattel signals end to Toys 'R' Us woes as Barbie boosts sales

(Reuters) - Mattel Inc beat Wall Street estimates for quarterly revenue on Thursday, as a more diverse range of Barbie dolls and new toys based on franchises such as the “Jurassic World” powered sales in the United States.

FILE PHOTO: Comic Con fans gather at the Mattel booth as they participate in the opening preview night at Comic Con International in San Diego,California, U.S., July 19, 2017. REUTERS/Mike Blake

Shares rose about 12 percent after hours, as the results eased investor fears of a slowdown in Barbie sales this year due to the release of a new “Frozen” movie, whose doll licenses are held by rival Hasbro Inc.

Mattel’s revenue beat, along with Hasbro’s surprise quarterly profit earlier this week, also signaled that U.S. toymakers may have put behind them the sudden demise of top toy retailer and customer Toys “R” Us.

“We’ve moved on past Toys “R” Us,” Mattel Chief Executive Officer Ynon Kreiz told Reuters, adding that the company was benefiting from its expanded partnerships with other retailers, ranging from grocers to drug stores.

A makeover of Mattel’s 60-year-old Barbie brand with new skin tones and professions and a focus on toys based on big Hollywood franchises such as “Toy Story” and “Jurassic World” highlight the toymaker’s efforts to connect with changing preferences of a new generation of kids.

Under Kreiz, who once headed TV production house Endemol Group, Mattel is relying more on those big third party entertainment franchises to create future growth.

Mattel executives on an earnings call said the company was “extremely bullish” on the “Toy Story” franchise as its latest installment hits theaters in June.

“This year Mattel’s relationship with Disney/Pixar and Toy Story 4 is extraordinarily important largely because the company has lost some of its franchise brands, like Disney Princess, which switched over to Hasbro in the last couple of years,” James Zahn, senior editor at trade magazine “The Toy Book” said.

Gross sales of Barbie rose 7 percent in the first quarter, the sixth straight quarter of growth.

Mattel’s doll sales are expected to get a boost from an upcoming line based on the hugely popular Korean boy band BTS, as the company looks to tap into the K-pop craze among teens in the United States.

The company posted a smaller-than-expected 2.7 percent decline in total sales to $689.2 million, buoyed by a surprise rise in sales in North America. Analysts had expected a near 13 percent drop, according to IBES data from Refinitiv.

Excluding certain items, the company recorded a loss of 44 cents per share, smaller than the 56 cents analysts had expected.

Kreiz said a voluntary recall by Fisher-Price earlier this month of all its “Rock ‘n Play Sleeper” products following reports of more than 30 infant deaths had an estimated $27 million impact on latest earnings.

The company’s shares were trading at $13.73.

Reporting by Uday Sampath in Bengaluru; Editing by Arun Koyyur and Sriraj Kalluvila

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