Barbie, American Girl drive Mattel Q4 beat

DETROIT (Reuters) - Mattel Inc, the No.1 toymaker, posted quarterly results that breezed past market estimates, helped by strong demand for its core Barbie and American Girl brands, sending shares up 1.4 percent in premarket trading.

The better-than-expected results and rising inventories come just weeks after smaller rivals Hasbro Inc and LeapFrog Enterprises Inc warned sales slowed late in the biggest selling season of the year.

BMO Capital Markets analyst Gerrick Johnson said Mattel gained share and is looking strong to continue its momentum.

"They're really set up nicely for 2011," said Johnson, who has an "outperform" rating on the shares. "Yeah, fourth quarter's good; they bucked the trend of weakness. These guys made their numbers and are set up really nicely for 2011."

Johnson cited strong new product introductions by Mattel like Monster High and Sing-A-Ma-Jig and good performance by its core Barbie brand. The new products all sold out in the fourth quarter, and were measured in tens of millions of dollars in 2010, but will grow to hundreds of millions of dollars this year.

Mattel's fourth-quarter net profit was $325.2 million, or 89 cents a share, compared with $328.4 million, or 89 cents a share, a year ago. That was 3 cents better than analysts polled by Thomson Reuters I/B/E/S had expected.

The company benefited by 3 cents to 5 cents from a lower than expected tax rate, analysts said.

Mattel, which announced the departure of the president of Mattel Brands, Neil Friedman, last month, said Barbie and American Girl sales rose 8 percent. Fisher-Price sales remained flat while Hot Wheels was up 1 percent.

Mattel, which counts billionaire investor Carl Icahn among its investors, said sales rose 9 percent to $2.12 billion, above the $2.09 billion analysts had expected. Sales included a reduction of 2 percentage points due to currency exchange rates.

Gross sales were up 11 percent in the United States and 6 percent internationally. The company said inventory levels rose to meet growing demand and to improve customer service levels, compared with significant liquidation of inventories in 2009 due to the economic uncertainty.

UBS analyst Robert Carroll said the inventories were up 30 percent, but Mattel's comments on demand would alleviate some investor concerns exiting the holidays.

Gross margin fell 1.82 percentage points to 51.6 percent, but that was still above the 50.3 percent Carroll had expected. Carroll has a "buy" rating on the stock.

Shares of El Segundo, California-based Mattel rose 1.4 percent in premarket trading to $24.49. The shares have stayed mostly flat since the company reported third-quarter results in October.

(Reporting by Ben Klayman in Detroit, additional reporting by Dhanya Skariachan in New York and NR Sethuraman in Bangalore; Editing by Unnikrishnan Nair, Dave Zimmerman)

WhatsAppFacebookTwitterLinkedinBeloudBluesky