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Mattel reports strong profits for 2010 and holiday period

Healthy sales of core brands such as Barbie and American Girl dolls help deliver strong results for Mattel, the world's largest toy maker, for both the full year and the crucial fourth quarter.

February 03, 2011|By Andrea Chang, Los Angeles Times

Mattel Inc., the world's largest toy maker, reported strong fourth-quarter and full-year results Wednesday thanks to healthy sales of core brands and doll lines including Barbie, American Girl and Monster High.

For the three months ended Dec. 31, the El Segundo company reported profit of $325.2 million, or 89 cents a share, compared with $328.4 million, or 89 cents, in the same quarter a year earlier.

Fourth-quarter sales totaled $2.12 billion, a 9% increase from the year-earlier quarter; sales in the U.S. were up 11%. The fourth quarter is the most important time of the year for toy makers, with many seeing nearly 40% of their sales come during the holiday rush.

For the year, Mattel reported a profit of $684.9 million, or $1.86 a share, a nearly 30% increase compared with $528.7 million, or $1.45, in 2009. Sales were $5.86 billion, an 8% increase from $5.43 billion in 2009; full-year gross sales were up 9% in the U.S.

"I am pleased with our strong results for the quarter and the year, with revenue growth across brands and markets, and improved profitability," Chief Executive Robert A. Eckert said in a statement.

"Our priority for 2011 is to accelerate our performance by inculcating our new vision and implementing a new organizational structure, uncovering the next layer of cost-cutting opportunities, generating significant cash flow and deploying capital in a disciplined and opportunistic manner," he said.

Shares of Mattel rose 22 cents, or 0.9%, to $24.37.

Last week NPD Group reported that the toy industry saw a slight uptick in 2010, with sales rising 2% over 2009. U.S. retail sales of toys totaled $21.87 billion, up from $21.46 billion a year earlier. Strong fourth-quarter sales, which were up 3% year over year, amounted to $10.2 billion.

Plush toys and building sets saw the most significant increases at 18% and 13%, respectively, the market research firm said. Outdoor and sports toys saw an increase of 9%, and dolls and infant/preschool toys had increases of 6%.

Even as Mattel reaps the rewards of an improved economy and better consumer spending, it's also back in the courtroom to renew the years-long battle with rival MGA Entertainment Inc. over ownership of the sultry Bratz dolls.

The retrial, which began in federal court in Santa Ana last month, is expected to last three to four months. The two companies are fighting over whether Van Nuys-based MGA, maker of the Bratz dolls, infringed Mattel's copyrights after Bratz creator and former Barbie designer Carter Bryant took the idea for the pouty-lipped, big-headed dolls to MGA after he quit Mattel.

A jury in Riverside sided with Mattel in 2008, awarding the company $100 million in damages. That ruling was reversed in July by the Ninth Circuit Court of Appeals.

During a call with analysts Wednesday, Eckert said it would be difficult for Mattel to scale back its legal expenses this year because of the trial.

"As much as I would have preferred to settle the dispute, that wasn't my unilateral prerogative. We have a strong case," he said. "And then I'm hopeful we can finally put this behind us. But I'll also say — having said that, this is a matter of principle, it's about righting a wrong, and I have confidence in the system and that we'll prevail."

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