Lower costs and demand for Hot Wheels, Barbie and Monster High give lift to Mattel in 2Q

NEW YORK, N.Y. – It was a doll of a quarter for Mattel.

Demand for doll brands including Barbie, American Girl and Monster High, coupled with lower sales costs and advertising expenses, helped the biggest U.S. toy maker’s net income rise 20 per cent in the second quarter.

The results for a seasonally slow period for toy companies beat Wall Street estimates. It’s a positive sign as the company heads into the second half of the year, which includes the all-important holiday season and contributes the bulk of its sales, particularly since analysts were expecting net income to decline.

The news sent shares up 9 per cent in midday trading.

Mattel, which also makes Hot Wheels and Fisher-Price toys, said Tuesday that its net income rose to US$96.2 million, or 28 cents per share, in the April to June quarter. That compares with $80.5 million, or 23 cents per share, a year ago.

That beat the 20 cents per share that analysts surveyed by FactSet expected.

“We delivered solid performance as we continued to build momentum with key brands, such as Barbie, Monster High, American Girl and Hot Wheels, as well as the ‘Batman – The Dark Night Rises’ property, despite a continued cautious global retail environment and a strengthening U.S. dollar,” CEO Bryan Stockton said in a statement.

Revenue held at $1.16 billion, but topped Wall Street’s estimate of $1.13 billion.

Its shares rose $2.81, or 9.1 per cent, to $33.85 in midday trading. Its shares have been trading near the high end of their 52-week range. Mattel shares peaked at $34.62 per share in late March.

Mattel looked to combat the seasonal sales slowness — and continued high costs for commodities like packaging and fuel — by reducing some of its costs. Cost of sales fell 7 per cent to $564.2 million, while advertising spending fell 3 per cent to $112.4 million.

Sales of Hot Wheels climbed 11 per cent, while Barbie sales rose 5 per cent.

Worldwide sales of Mattel’s other girls brands, which includes Monster High, soared 96 per cent. Monster High, which Mattel launched in 2010, has been a successful new toy franchise for the company. The line includes dolls that are the offspring of famous monsters, and are promoted by young adult books and a Web series.

Mattel on Tuesday said it plans to launch another new franchise in 2013 but would not say if it would be aimed at girls or boys. It said it would give more details in October.

The entertainment segment, which includes Radica and games, posted a 36 per cent sales decline as shoppers purchased fewer “Cars 2” products. The movie “Cars 2” was in theatres last summer. Toys tied to movies typically sell the most amount of products closer to the period that the movies are in theatres, with sales falling afterward.

Mattel, which is based in El Segundo, Calif., also declared a third-quarter dividend of 31 cents per share. The dividend will be paid on Sept. 21 to shareholders of record on Aug. 29.