Tax gain helps boost Mattel profits

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Mattel, the US’s largest toymaker, said a rejuvenated Barbie helped lift worldwide sales and a one-off $65m tax payment boosted earnings in the crucial fourth quarter.

The Californian-based company said it finished the year with “improved momentum” having warned in the third quarter that the trading environment was challenging as cut-price retailers such as Wal-Mart and Target drove specialist toy retailers out of business.

On Monday, Mattel reported a 6 per cent increase in fourth-quarter sales to $1.85bn, partially helped by a weak dollar, which accounted for 200 basis points of the rise.

Net income rose 32 per cent to $284.3m, or 68 cents a share, from $213.9m, or 49 cents a share, helped by a one-off $65m tax rebate from the US government for the years between 1998 and 2001.

Sales of Barbie, the iconic girl’s doll who has been eclipsed in recent years by young upstarts such as Bratz, accelerated in the run-up to Christmas. Last year Barbie sales fell 5 per cent, but this year that decline was just 1 per cent as the toymaker pushed a range of accessories, including a designer jacket that retailed for £250.

Other products that proved a hit with children around the world included Hot Wheels, the racing car range of toys for young boys, sales of which rose 8 per cent in the quarter and entertainment, which saw a 30 per cent jump in sales.

The company, which also owns the Fisher-Price brand of toys, said however that gross margins shrank 130 basis points in the quarter.

For the full year net sales rose 3 per cent to $5.10bn and operating income slipped 7 per cent to $730.8m.

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