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`Cars,' `Superman' Give Mattel's Earnings a Lift

July 18, 2006|Abigail Goldman | Times Staff Writer

Superman, with help from some smiling cars, proved more powerful than a locomotive for toy maker Mattel Inc.'s second quarter.

The El Segundo-based toy maker said Monday that toys based on the movies "Superman Returns" and "Cars," along with better-than-expected sales of Barbie dolls, drove sales up 8% to $957.7 million, the top quarterly sales gain in a year.

Shares of Mattel, which also makes Hot Wheels and Matchbox cars, rose 11% on the news to $17.60. The stock had fallen 17% over the last year.

Higher retail prices also helped increase profit to $37.4 million, or 10 cents a share, compared with a loss of $94 million, or 23 cents a share, during the same period a year earlier.

U.S. sales of Barbie, which has lost market share to MGA Entertainment Inc.'s Bratz dolls, followed last quarter's gains with a 2% rise, marking the first time in more than five years that Mattel has reported back-to-back quarterly increases in the Barbie brand.

"This gives investors confidence that there may be some change underway in the market share between Barbie and Bratz," said Bob Goldsborough, who helps manage $16.8 billion in assets at Chicago-based Ariel Capital Management. "It raises the bar on expectations for the holiday season."

Ariel sold half its stake in Mattel during the second quarter as the investment firm continued to pare its toy-related holdings and now holds 7.57 million shares, or about a 2% stake, Goldsborough said.

Global sales of Barbie fell 1%, the 11th straight quarterly drop. About 25% of Mattel's revenue and 35% of its operating profit come from the 11.5-inch tall fashion doll introduced in 1959, JPMorgan Chase & Co. analyst Dean Gianoukos said.

The increase in U.S. Barbie sales was led by the Mermaidia and Barbie Princesses dolls, Chief Executive Robert Eckert said during a conference call with investors and analysts.

"It's obviously much too early to declare victory, but I'm encouraged by this positive trend in Barbie," Eckert said during the call.

Games, puzzles and other entertainment revenue climbed 38% on "Cars" and "Superman Returns" products.

Sales of Fisher-Price products, including car seats and Dora the Explorer toys, rose 8.4%.

*

Bloomberg News was used in compiling this report.

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