Mattel 2nd-quarter net income jumps 56 percent

AP News
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Posted: Jul 15, 2011 6:50 PM
Mattel 2nd-quarter net income jumps 56 percent

Toys based on "Cars 2" are zooming ahead.

Mattel Inc. said Friday that sales of play sets and cars tied to the Disney/Pixar movie are selling even faster than toys tied to "Toy Story 3" did when they launched last year.

That revenue plus strong sales of Mattel favorites like Barbie helped push up second-quarter income at the largest U.S. toy maker by 56 percent.

Toys tied into movies typically sell well, but Mattel, which also sells tie-ins to "Green Lantern," says they've been especially popular this summer. "Cars 2" sales helped revenue in Mattel's entertainment division rise 41 percent.

CEO Robert Eckert said in a call with analysts that Mattel's other divisions are doing well too.

"While the second quarter is typically all about the big entertainment properties, and certainly `Cars 2' was big for us, our global portfolio of core brands is also fueling momentum," he said, singling out Barbie and Monster High toys as particularly strong performers.

Mattel's net income for the three months that ended June 30 rose to $80.5 million, or 23 cents per share. Analysts expected adjusted net income of 16 cents per share, according to Fact Set.

Revenue rose 14 percent to $1.16 billion from a year earlier. Analysts expected revenue of $1.1 billion. U.S. revenue rose 7 percent while international sales jumped 23 percent.

"Despite the mixed economic news, I am encouraged by our strong operating results and continue to believe we are well positioned for the all-important second half of the year," Eckert said.

The second half of the year is more important for toy makers because it includes the holiday season.

Mattel and other toy makers are facing rising costs for commodities like resin and fuel, which they are passing on to consumers with price increases. Mattel said it doesn't plan any more price hikes this year on top of those it made in the first half.

Eckert said retailers remain "cautious" about the economy, as they have been for the past 18 months. But "the toy business has now demonstrated that it's grown in tough times," he said.

Barbie sales rose 12 percent. Monster High and Disney Princess lines also performed well. Disney Princess results were driven by sales of dolls, accessories and play sets based on the film "Tangled," which was released on DVD in several countries during the quarter.

A weak spot was Hot Wheels. Sales fell 2 percent. Mattel said sales of "Cars 2" toys probably cut into Hot Wheels' business.

Sales of Fisher-Price toys, including the Thomas and Friends line of train-related toys, rose 4 percent. American Girl doll and accessories sales rose 13 percent.

Now, Mattel is developing toys related to the Disney/Pixar movie "Brave," due out in June 2012, which is about a Scottish princess and archer; to Disney's "Planes," due out on Blu-ray and DVD in the spring of 2013; and to Warner Brothers next Batman movie, "The Dark Knight Rises," due July 2012.

Mattel Inc. is based in El Segundo, Calif. Chief rival Hasbro Inc. reports results on Monday.

Mattel share rose 50 cents, or 1.9 percent, to close at $27.28.