Mattel Surges Most Since 2009 as Prices Fuel Profit

Mattel Inc. (MAT), the world’s largest toymaker, surged the most in more than three years as price increases helped second-quarter profit and revenue top analysts’ estimates.

Mattel gained 9.7 percent to $34.05 at the close in New York for the largest gain since April 17, 2009. The shares of the El Segundo, California-based company have gained 23 percent this year.

The maker of Barbie and Hot Wheels brands has been raising prices to combat higher costs for raw materials and labor in Asia, where it manufacturers its toys. That’s now improving gross margin, which widened from a year earlier.

“Price increases seem to have stuck, so the gross margin outlook is encouraging,” Sean McGowan, an analyst for Needham & Co. in New York, said in a telephone interview. “Adding it up, whatever expectations were for the quarter, they blew it away.”

McGowan, who recommends buying Mattel shares, had projected a 0.3 percentage point gain in gross margin.

Gross margin, or the percentage of sales left after the cost of goods sold, expanded 3.4 percentage points to 51.3 percent from a year ago.

Net income advanced 20 percent to $96.2 million, or 28 cents a share, from $80.5 million, or 23 cents, a year earlier, Mattel said in a statement. Analysts on average had estimated 21 cents, according to data compiled by Bloomberg.

Photographer: Tim Boyle/Bloomberg

Mattel Inc.'s Hot Wheels at a Target Corp. store in Rosemont, Illinois. Close

Mattel Inc.'s Hot Wheels at a Target Corp. store in Rosemont, Illinois.

Close
Open
Photographer: Tim Boyle/Bloomberg

Mattel Inc.'s Hot Wheels at a Target Corp. store in Rosemont, Illinois.

Total revenue was little changed from a year earlier at $1.16 billion, the company said. Analysts had estimated $1.13 billion.

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.