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Mattel posts strong third-quarter results

Mattel reports a 22% increase in profit as it heads into the crucial holiday shopping season.

October 17, 2012|By Shan Li, Los Angeles Times
  • A 16% increase in American Girls dolls sales helped Mattel post strong third-quarter results.
A 16% increase in American Girls dolls sales helped Mattel post strong third-quarter… (Matt McClain, The Washington…)

Toy maker Mattel Inc. reported a strong third quarter Tuesday, lifted by sales of American Girl dolls and Fisher-Price toys just ahead of the crucial holiday season.

Analysts say the quarter gives the El Segundo company a boost for the coming months, when retailers typically rake in as much as 40% of their annual sales.

For the quarter that ended Sept. 30, Mattel posted a profit of $365.9 million, or $1.04 a share, up nearly 22% from $300.8 million, or 86 cents a share, in the same period last year. Sales rose 4% to $2.08 billion.

The strong showing "represents another quarter of building momentum in the marketplace," said Bryan Stockton, Mattel's chief executive.

"With the holidays still in front of us, we remain focused on executing our business and driving retail sales in the all-important holiday season," Stockton said in a Tuesday call with analysts.

Mattel has worked successfully to attract children who are increasingly sophisticated consumers of technology and not as interested in classic toys with no digital component, said Jason Moser, a research analyst at Motley Fool.

"They've done a good job of developing into more of an entertainment company as opposed to just a toy company," Moser said. "That is something Mattel will continue to focus on, and developing relationships with WWE and Warner Bros. and Disney and pulling in licensing revenue."

Mattel said that American Girls sales increased 16% and Fisher-Price rose 6%. That offset a 4% drop in its Barbie line, a decline in toys linked to the movie "Cars 2" and flat sales in Hot Wheels items.

Consumers who feel slightly better about the economy will probably hand Mattel a strong holiday season, analysts said.

"Last year the overall attitude was more glum than it is today," Moser said. "The perception out there is people feel a little bit more on a stable footing and will spend a little more."

Toy retailers are already primed to woo those dollars, with many chains announcing extra services for the holidays. Toys R Us recently rolled out a reservation program so harried parents can get their hands on some popular items. Wal-Mart Stores Inc. extended its layaway program by a month and slashed its fee for opening an account.

Shares of Mattel rose $1.78, or 5%, to $37.20 in trading Tuesday.

shan.li@latimes.com

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