Company’s shares soared 19% in extended trading, largely thanks to a successful makeover of its iconic doll brand.
Mattel posted a surprise fourth-quarter profit on Thursday. Barbie ended the year with its highest gross sales in five years, Mattel said, highlighting the company’s success in diversifying the traditionally blonde doll by giving it different skin tones and dressing it in attires ranging from hijabs to space suits.
The Barbie Dreamhouse, which retails for $200 (£154), was among the top ten best-selling toys in the United States in 2018, according to market research firm NPD group. Gross sales rose 12% for Barbie and 9% for Hot Wheels in the fourth quarter, surpassing analysts’ estimates for both brands.
To tap into the renewed popularity of the doll, Mattel has partnered with Warner Bros. to make a live-action feature movie on Barbie, starring Oscar-nominated actress Margot Robbie. The company also benefited from its plans to streamline its operations, with costs falling 27% to $814.7m in the quarter.
Mattel has been aiming to cut at least $650m in net costs by the end of 2019 through job cuts and other measures such as looking at options for its manufacturing facilities.
Ynon Kreiz, chairman and CEO of Mattel, commented: “Our fourth quarter results demonstrate meaningful progress in executing our strategy and significant improvement over last year. We remain focused on advancing our strategy to restore profitability and regain top-line growth in the short-to-mid-term and are laying the groundwork to capture the full value of our IP in the mid-to-long-term. After three consecutive quarters of solid, disciplined execution, we are well on our way to becoming an IP-driven, high-performing toy company and creating long-term value for our shareholders. Among all the achievements in 2018, I would like to applaud our team for regaining the No. 1 toy company position globally in a year full of challenges and headwinds. This is a great moment to celebrate, before we go back and continue the hard work of implementing our multi-year turnaround.”
Mattel reported net income of $14.9m, or 4 cents per share, in the quarter ended 31st December, compared with a loss of $281.3m, or 82 cents per share, a year earlier, when it took a one-time charge related to changes in US tax laws. Analysts had expected a loss of 16 cents per share, according to IBES data from Refinitiv.
However, gross sales in North America fell 10.1% to $744.5m, reflecting Mattel’s struggles with finding a major retailer to make up for lost sales from the shuttering of Toys R Us. Overall, Mattel’s net revenue fell 5.4% to $1.52b, but was still above analysts’ estimates of $1.44b.