Mattel 2Q Profit Rises 82 Percent on Cost-Cutting

In this photo made Monday, March 9, 2009, decorations are seen at Barbie's Real-Life Malibu Dream...

In this photo made Monday, March 9, 2009, decorations are seen at Barbie's Real-Life Malibu Dream House, Monday, March 09, 2009 in Malibu, Calif. Toy maker Mattel Inc. said Friday sales of Barbie and other toys sank in the second quarter, but profit rose 82 percent, beating analyst expectations, as the company cut down on expenses. (AP Photo/Mattel, Shea Walsh)

(AP)

Light on summer-movie tie-in toys this year, Mattel Inc. said Friday its sales sank 19 percent in the fiscal second-quarter, but cost cuts and lower inventory helped it post an 82 percent jump in profit, beating analyst expectations.

The tight rein on costs and inventory will continue throughout the year, as the company — and toy makers in general — seek to avoid a repeat of last year's dismal holiday season. The maker of Barbie and Hot Wheels toys is in the midst of a cost-cutting plan designed to save $180 million to $200 million over two years.

The better-than-expected profit sent Mattel shares up $1.23, or 7.6 percent, to close at $17.42 Friday. The stock has traded between $10.36 and $21.95 during the last 52 weeks.

Profit for the quarter ended June 30 totaled $21.5 million, or 6 cents per share, up from $11.8 million, or 3 cents per share, last year.

Revenue fell 19 percent to $898.2 million from $1.11 billion. The stronger dollar hurt sales by about 5 percentage points.

Analysts polled by Thomson Reuters predicted Mattel would break even on a per share basis on revenue of $969.7 million.

During a conference call with analysts, CEO Robert A. Eckert said the sales decline was caused by continued cautious retailer ordering, fewer toys geared to summer movies and the stronger dollar.

Eckert expects those trends to continue during the second half of the year "as our customers continue to cautiously align their inventory bets with consumer demand," he said.

The second-quarter, while a seasonally small quarter, is typically a key shipping period for summer movie-related products. Last year's second quarter was boosted by toys related to movies including "The Dark Knight," "Speed Racer" and "Kung Fu Panda."

This year, however, rival Hasbro Inc. is making toys tied to some of the biggest summer movies, including "Transformers: Revenge of the Fallen" and the upcoming "G.I. Joe: The Rise of the Cobra."