The Wall Street Journal-20080201-Mattel Profits Despite Barbie- Line Struggles in U-S- Amid Effort to Expand Into Fashion- Web Areas
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Mattel Profits Despite Barbie; Line Struggles in U.S. Amid Effort to Expand Into Fashion, Web Areas
Full Text (416 words)Mattel Inc.'s fourth-quarter earnings rose 15% but brought mixed tidings for the company's Barbie doll, which showed strong growth internationally but took a sales dive in the U.S.
Barbie-brand sales in the U.S. dropped 12% in the quarter and 15% in the year, which Chief Executive Robert Eckert described as "disappointing" in a conference call with analysts. The fourth-quarter decline, which included holiday-season sales, shows that Mattel's moves to leverage the Barbie name into new arenas like social networking and fashion haven't fully kicked in domestically. On the plus side, overseas Barbie sales rose 13%.
Mattel, which also makes Fisher-Price educational toys and Hot Wheels and Matchbox cars, benefited from a generally strong performance abroad. The El Segundo, Calif., company said results for the latest quarter included $47.3 million in tax benefits, largely offset by $42 million in charges from last year's toy recalls that rocked the company's reputation.
In 4 p.m. composite trading on the New York Stock Exchange, Mattel shares rose $2.07, or 11%, to $21.01.
Mattel attributed Barbie's laggard domestic performance in part to Barbie's "Fantasy" franchise, which markets dolls and DVDs with fairy- tale themes to younger children. The company also cited problems with its "My Scene" line, a fashion doll aimed at the hard-to-reach segment of girls age 8 to 12. For years, Barbie has faced stiff competition from MGA Entertainment Inc.'s hip-hop style "Bratz" doll, which was launched in 2001.
That doesn't mean girls have lost their taste for Barbie, says Sean McGowan, an analyst at Needham & Co. who covers the toy industry. Mr. McGowan pointed to the strong performance of barbiegirls.com, a free online play site that was launched last year. While girls may not actively be asking for dolls, he said, "kids still care about the brand."
Mattel also experimented last year with a $60 Barbie digital-music player, part of an effort to break into the consumer-electronics category, whose high price points stymie toy sales as children play with gadgets at younger ages. But the item's performance was modest, say analysts, and it fell prey to deep discounting by the end of the holiday season.
More hope for the brand's future may lie overseas, where Mattel is courting new markets with more potential for growth than the U.S. A Barbie-themed store opened in Buenos Aires last fall, for example. And Mattel continues to point to Asia and Europe as arenas for expansion. "They need to look at what they're doing in foreign markets," said Needham's Mr. McGowan.
