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Mattel reports higher profits for fourth quarter and full year

February 01, 2012|By Shan Li, Los Angeles Times

Toy maker Mattel Inc. reported positive fourth-quarter and full-year results Tuesday after healthy holiday sales of core brands and doll lines, including Hot Wheels, American Girl and Barbie.

For the three months that ended Dec. 31, the El Segundo company reported a profit of $370.6 million, or $1.07 a share, a 14% jump from $325.2 million, or 89 cents a share, in the same quarter of 2010.

Fourth-quarter sales totaled $2.15 billion, a 1% increase from the year-earlier period. The final quarter is especially crucial for toy companies, with many raking in nearly 40% of their annual sales during the frenzied present-buying of the holiday season.

For the year, Mattel reported a profit of $768.5 million, or $2.18 a share, up 12% from $684.9 million, or $1.86 a share, in 2010. Sales were $6.27 billion, a 7% increase from $5.86 billion in 2010.

"Mattel delivered another strong year, our third consecutive year of solid performance, which I am especially pleased about given the soft global economic backdrop and the highly promotional environment, particularly in the U.S.," Chief Executive Bryan G. Stockton said in a statement. "Despite these challenges, for the year we delivered strong revenue growth and record operating income. Our portfolio of brands performed around the globe. Our point-of-sale grew nicely."

Gerrick Johnson, a toy analyst at BMO Capital Markets, said the earnings results were solid but not spectacular.

"I characterize it as good enough. It was good enough to satisfy Wall Street, it was good enough to satisfy the holiday season," Johnson said. "The sales growth they reported was a little light compared to what we were expecting."

During the holiday season, retailers such as Toys R Us Inc., Target Corp and Wal-Mart Stores Inc. kept slim inventories and unloaded their child-friendly wares from the toy maker, Johnson said. That positions Mattel nicely for the first half of 2012 as retail chains put in new orders to restock their shelves.

"The good news is that inventories are lean, and that should indicate that first spring shipments into retailers should be good for Mattel," Johnson said.

But it was not all good news for the toy giant. In August, Mattel was ordered to pay more than $309 million in damages and fees to rival MGA Entertainment Inc. of Van Nuys after losing a retrial over who owns the rights to the hip Bratz dolls.

The long-running dispute pitted Mattel, the world's No. 1 toy maker, against MGA, a relative unknown in the toy industry before it rolled out the multiethnic, sultry Bratz line in 2001. Mattel contended that MGA infringed its copyrights when former Barbie designer and Bratz creator Carter Bryant took the idea of the dolls to MGA after quitting Mattel.

In the first trial, a Riverside jury in 2008 sided with Mattel and awarded the company $100 million in damages. The U.S. 9th Circuit Court of Appeals reversed that ruling in July 2010.

During a call with analysts Tuesday, Stockton said Mattel would appeal the August decision and planned to file an opening brief to the court by the end of February.

Mattel shares rose $1.47, or 5%, to $31 on Tuesday.

shan.li@latimes.com

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