UPDATE 3-Mattel sees strong 2010 despite Q4 sales miss

* Sees strong 2010, optimistic on new toy lines

* Q4 EPS ex-items 81 cents vs. Street’s 68 cents

* Sales up 1 pct at $1.96 bln, but miss Wall Street view

* Shares down 1 pct
(Recasts first paragraph to include 2010 outlook, adds analyst
comments and byline, updates stock activity)

By Dhanya Skariachan

NEW YORK, Jan 29 (BestGrowthStock) – Mattel Inc (MAT.O: ) reported a
holiday-quarter profit (Read more your timing to make a profit.) that beat Wall Street estimates and
forecast a strong 2010 from new toy lines and renewed demand
for its Barbie dolls.

Shares of Mattel rose initially, but then fell on
disappointing holiday revenue figures and investor worries that
higher labor costs could limit gross margin growth.

Mattel’s profit for the quarter beat expectations due to
lower resin prices and cost-cutting initiatives.

Its fourth-quarter net income rose to $328.4 million, or 89
cents a share, from $176.4 million, or 49 cents a share, a year
earlier.

Excluding a tax benefit, the profit was 81 cents a share,
beating the analysts’ average forecast of 68 cents, according
to Thomson Reuters I/B/E/S.

Net sales in the fourth quarter rose 1 percent to $1.96
billion, including a benefit of 4 percentage points from
changes in currency exchange rates. Analysts had expected sales
of $1.98 billion.

The company is hoping to gain from the release of “Toy
Story 3 movie” and it recently gave its 50-year-old iconic
product Barbie a facelift.

While Barbie and its classic Hot Wheels brand saw
percentage sales growth in double digits, Mattel reported flat
sales at its Fisher-Price and American Girl brands.

“We think Mattel will face a difficult selling environment
in 2010 but expect momentum at Barbie and Hot Wheels to
continue,” Standard & Poor’s analyst Erik Kolb said in a note.

The company, whose rivals include Hasbro (HAS.N: ) and Hello
Kitty creator Sanrio Co Ltd (8136.T: ) of Japan, is expanding its
presence in emerging markets like China and India to offset
weakness at home.

Mattel said gross sales fell 2 percent domestically and
rose 3 percent internationally.

“We are concerned about some core brands, like Fisher
Price, which fell 3.2 percent. We also expect international
sales to continue outpacing domestic,” Kolb said.

Other analysts said the share price fall was unwarranted
due to the toy maker strong prospects in 2010.

“We expect 2010 sales to benefit from new product lines, a
potentially improved economy, and the Toy Story 3 movie
release,” Morgan Joseph analyst Jeffrey Blaeser said. He
upgraded the stock to a “buy.”

Mattel shares were down 19 cents at $19.85 in afternoon
trading. They have nearly doubled after touching a 52-week low
of $10.36 last March.

Stock Trading

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn and
Tim Dobbyn)

UPDATE 3-Mattel sees strong 2010 despite Q4 sales miss