Mattel Toys Playing Well Abroad

Mattel, based in El Segundo, Calif., reported earnings of 89 cents a share for the fourth quarter, up from 75 cents a share a year ago. Wall Street analysts polled by Thomson Financial expected an average of 73 cents a share. Mattel attributed 13 cents per share on its bottom line to income tax benefits, but also reported an 18% increase in sales overseas, more than offsetting the 3% drop in the U.S.

That decline was precipitated by retailers' worries about the holiday shopping season as well as bad publicity over recalls of hazardous toys. Some of Mattel's Sesame Street vehicles were pulled off store shelves over lead paint, and some Polly Pocket Dolls met the same fate lest their small magnets end up lodged in children's throats.

"Considering the unexpected challenges we faced in 2007, I believe we delivered good results," CEO Bob Eckert said on the Thursday morning conference call. "While the U.S. business was down slightly for the year, in international markets we experienced double-digit growth across all regions."

Preview notes from analysts at Wedbush Morgan and Needham & Co., painted a somber picture of the toy business in 2008. Chris White, at Wedbush, bemoaned the lack of a "must have product" such as 2006's Elmo TMX doll in a Tuesday note, and Needham's Sean McGowan wrote Wednesday that an anticipated 10% slide in domestic Barbie sales would hurt results.

As it turned out, Barbie sales sagged 12% Stateside in the absence of new fantasy-themed products, but rose 4% overall thanks to 13% growth overseas.

Eckert estimated that U.S. Barbie sales represent 6% of Mattel's total revenue, but noted that "there's more to the Mattel portfolio than one brand in one country"

World-wide, Polly Pocket sales increased 19%, and vehicles, including Hot Wheels climbed 15%. American Girl doll sales dropped 1.5%. Fisher-Price preschool toys such as the Smart Cycle exercise bike rose 4.3%.