If you read Matt Richey's excellent Take on toy maker Mattel's (NYSE:MAT) Q1 earnings last April, you'll be well-prepared for its full-year 2003 results, which were released today. Then, as now, the company said that while worldwide revenue growth wasn't spectacular because of falling domestic sales, profits still grew because of strong international growth and an improved cost structure.
Mattel provides incredibly detailed income statement numbers, though I'm sorry to see no cash flow statement on the news release. Looking at the big-picture numbers for the full year, sales rose only 2% year over year, but gross margins strengthened and selling, general, and administrative expenses fell, boosting operating income as a result. International sales powered the top line, rising 5% (or 15% if you include currency effects) as domestic revenues fell 6%. Net income more than doubled to $538 million.
We don't have Q4 results from challenger and Motley Fool Stock Advisor recommendation Hasbro (NYSE:HAS) yet, but based on its performance over the first nine months of 2003, there are some significant differences: Hasbro's domestic operations are growing again, in large part because of reenergized games sales.
Despite Hasbro's numbers, Mattel has come a long way since Jill Barad gave up the CEO's duties four years ago. At the time, Mattel investors were unhappy both with the failed acquisition of Learning Co. and a large-scale restructuring meant to save money. But what a difference a change makes: Mattel shares have handily outperformed the S&P 500 over those subsequent four years as the company's operational performance has shown marked improvement.
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Dave Marino-Nachison can be reached via email.
