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Mattel's third-quarter sales disappoint, but profit is up

Sales at the world's largest toy maker rose 2% from the year-earlier period, falling short of analysts' projections. Profit rose 23%, however.

October 16, 2010|By Andrea Chang, Los Angeles Times

Toy giant Mattel Inc. reported strong third-quarter profit but saw disappointing sales results for some of its core brands, sending its shares down Friday.

For the quarter ended Sept. 30, sales at the world's largest toy maker were $1.83 billion, up 2% from $1.79 billion in the year-earlier period. Analysts had expected $1.94 billion. Mattel said its revenue was negatively affected by unfavorable currency exchange rates.

Profit totaled $283.3 million, or 77 cents a share, a 23% increase from $229.8 million, or 63 cents, a year earlier.

El Segundo-based Mattel said it saw solid sales among its fashion dolls, including a 6% sales increase for Barbie products and a 2% increase for American Girl. Its new Monster High line was also performing well, executives said.

But other lines struggled: Sales of Hot Wheels were down 3%. And the Fisher-Price unit saw sales drop 5%, which Mattel said was mainly because of declines in the unit's Core and Power Wheels brands.

Mattel shares Friday tumbled $1.55, or 6.5%, to $22.45.

Last month, Fisher-Price announced a recall of about 11 million children's products because of safety hazards including choking; the company said at the time that the recall would slightly affect its earnings.

In a call with analysts Friday, Chief Executive Robert A. Eckert said the company continued to be pleased with the performance of its business but, as it turned it attention to the holiday season, "there are still some challenges ahead in relation to the biggest selling season for toys."

"Retailers remain guarded with inventories, and several are betting on a late holiday season this year," he said. "So, anticipating the question I'm asked most often during this time of year: Yes, there will be a Christmas and Mattel toys will be under the tree and we'll likely sell more toys than anyone else. [That] said, I suspect it'll play out later than we're accustomed to."

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