You've got to love being a toymaker over the holidays. Market leader Mattel
The strong showing, backed by double-digit sales growth both domestically and abroad, found the company growing earnings per share to $0.75 a share after a $0.69 per share showing a year earlier. Analysts were actually looking for a dip in reported profitability.
That would have been a successful showing anyway, because the 2005 figure is inflated by $0.11 a share because of a tax benefit. An aggressive approach to share buybacks reduced the number of fully diluted shares outstanding by nearly 5% over the past year. That helped pump up this year's bottom line result on a per share basis, but it wasn't necessary, as gross profit margins and operating margins improved during the quarter.
Why is Mattel doing so well? It's not all about the hard-to-find Tickle Me Elmo doll. Barbie is back. The September quarter was the first time that the company had grown year-over-year worldwide sales for Barbie in more than three years. Now it is building on that. In fact, Barbie's 3% top line spurt was better than the 2% advance by the company's seemingly fresher American Girl doll line.
Yes, Mattel is thriving in an environment that cynics figured would be dominated by next-generation video game platforms and MP3 players. We knew that wasn't the case three months ago, when both Mattel and Hasbro
This doesn't mean that the entire toy industry is doing as swell as Mattel. Smaller players like LeapFrog
So well done, Mattel. When times get tough, it's always good to know that Barbie's got your back.
Longtime Fool contributor Rick Munarriz was glad to see that the Elmo TMX dolls are now back in stock. He still has no interest in buying one. He does not own shares in any of the companies mentioned in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.