- Flagship doll posts first fourth-quarter sales gain since 2012
- Company also secures main license for fourth ‘Toy Story’ film
Mattel Inc., the owner of Barbie, Hot Wheels and Fisher-Price, surged the most in almost seven years after holiday results topped analysts’ estimates, a sign the world’s largest toy company is making progress in its comeback bid.
Excluding some items, profit was 63 cents a share in the fourth quarter, El Segundo, California-based Mattel said in a statement Monday after the market closed. Analysts had estimated 61 cents a share on average, according to data compiled by Bloomberg.
Mattel saw improvement with some of its long-struggling toy brands, including the flagship Barbie business. Barbie’s sales grew 1 percent last quarter -- and would have been up 8 percent if currency rates were held constant, the company said. Still, Mattel’s total gross sales fell. And revenue will take another hit this year as the licensing rights to Disney’s lucrative Frozen and Princess brands shift to rival Hasbro Inc.
The stock jumped 14 percent to $30.46 on Tuesday for the biggest daily gain since April 2009. Before the rally, Mattel had dropped 1.5 percent this year and 12 percent in 2015. That put the company below Hasbro in market valuation.
Currency continued to weigh on Mattel’s results, with the strong U.S. dollar eroding sales overseas. In constant currency, gross sales were up 3 percent last quarter, but they were down 4 percent after recording the dollar’s impact. The company expects companywide sales to be little changed for the year, a better outcome than predicted. Analysts have projected a drop of 3.5 percent.
For generations, Mattel could count on girls to snap up products like Barbie, American Girl and Monster High. But the company has lost market share in recent years to Lego and Hasbro’s reinvigorated My Little Pony brand. About a year ago, the company fired Chief Executive Officer Bryan Stockton and moved board member Chris Sinclair into that role. Reviving the Barbie business is key to his turnaround plan. Last week, the company unveiled dolls with a wider array of options, including shorter and “curvier” versions, in a bid to boost the brand’s appeal.
“Interest in Barbie among moms and girls is improving,” Richard Dickson, Mattel’s chief operating officer, said during a call with analysts on Monday.
Barbie’s latest sales increase marked the first time in four years that the Barbie brand grew during the fourth quarter -- a key period for the toy industry.
“The good news is that they stopped the bleeding at Barbie,” said Jaime Katz, an analyst at Morningstar Inc. “Now restoring the growth is going to be part of this Barbie rebranding.”
Mattel is looking to fill the void left by Frozen and Disney Princess with licenses like DC Super Hero Girls, which has products coming out later this year. It also announced it has secured the main toy license for the fourth installment of “Toy Story,” which will hit theaters in 2018.
“2016 will have its challenges, particularly on the top line, but we do expect to make additional good progress on all fronts,” Sinclair said on the conference call. “I’m pleased with the progress to date.”