Shares of Mattel (MAT -2.14%) climbed as much as 10.8% early Friday, then settled to trade up 3.1% as of 1:15 p.m. EDT after the toy maker announced better-than-expected first-quarter 2019 results.
More specifically, Mattel's quarterly net sales fell 3% as reported (but climbed 1% on a constant-currency basis) to $689.2 million, translating to a net loss of $183.7 million, or $0.53 per share, narrowed from a $0.90 per-share loss in the same year-ago period. Analysts, on average, were expecting a net loss of $0.56 per share on revenue of $645 million.
On one hand, Mattel can credit its top-line progress to a combination of growth from its Barbie line (with gross sales up 7% as reported and 13% at constant currency), its Hot Wheels products (up 4% as reported and 9% adjusted for currencies), and its combined action figures, building sets, and games business (up 18% as reported and 22% in constant currency). But Mattel's Fisher-Price and Thomas & Friends brands saw gross sales decline 8% as reported (and 5% at constant currencies).
Mattel CFO Joe Euteneuer noted this marks the company's third straight quarter of profitability improvements as well, particularly as its strategic "structural simplification" initiatives reached $610 million of annual run-rate savings exiting the quarter.
During the subsequent conference call, Euteneuer added that despite strong top-line momentum, Mattel is not changing its previously provided full-year outlook -- which calls for gross sales in 2019 to be roughly flat at constant currencies -- both as the "vast majority of the year is still ahead of us" and considering lost sales from a recent voluntary recall of Fisher-Price's Rock 'n Play Sleeper product.
Nonetheless, investors appear to be more than pleased with Mattel's strong start to the year, and the stock is responding in kind.