Mattel Sees Results From Barbie Makeover

Is Barbie back?

After two years of losing out to trendier rivals, the Mattel Inc. icon got a makeover last year, landing a look ripped from the pages of top fashion magazines and a celebrity promoter in Hilary Duff.

It looks like it paid off: Mattel, the world's largest toy maker, said Monday that stronger sales of its Barbie line helped boost profit 33% in the fourth quarter.

The stock jumped 6% on the news.

El Segundo-based Mattel earned $284.3 million, or 68 cents a share, in the quarter that ended Dec. 31, compared with $213.9 million, or 49 cents, in the same period a year earlier. Quarterly sales rose 6% to $1.85 billion.

Excluding a $65-million gain from a settlement with the Internal Revenue Service, the company earned 52 cents a share. Analysts surveyed by Thomson First Call had expected 48 cents.

"It was a very sharp reversal," said Sean McGowan of investment firm Harris Nesbitt in New York, who rates the stock "outperform." "Mattel is back with better product. There should be fertile ground for a recovery in 2005."

Although Barbie's worldwide sales fell 1% in the fourth quarter, her sales in the U.S. rose 3% -- compared with a 25% plunge in the same quarter of 2003. And the 2004 fourth quarter marked the first domestic uptick in Barbie sales since the last quarter of 2002.

The made-over Barbie line is, basically, hipper and flirtier. Mattel -- which signed singer-actress Duff of television's "Lizzie McGuire" to push Barbie products -- introduced Barbies sporting edgier hairstyles and of-the-moment accessories such as cellphones with instant messaging. Some of the dolls wear newsboy caps, hobo purses and midriff-baring street-savvy clothing. During the year, Barbie Cali Girl dumped long-standing flame Ken in favor of surfer dude Blaine.

Some analysts said the 45-year-old Barbie had finally turned a corner and figured out how to take market share back from competitors such as MGA Entertainment's hip-hop Bratz dolls. Others said it was just too early to predict a sustainable comeback.

Tim Conder of A.G. Edwards & Sons Inc. said he wasn't sure how much of the fourth-quarter sales uptick was due to the doll's resurging popularity rather than Mattel's ability to restock retailers' shelves in late December, when some of its rivals couldn't.

For all of Barbie's success in the quarter, the biggest sales increases came in the Fisher-Price division, which includes the Little People and Rescue Heroes toys. Worldwide gross sales for this division rose 10% to $658.5 million in the quarter.