If you're going to shine as a toy maker, let it be now, just as retailers are stocking up for the telltale holiday shopping season. That's what Mattel
Analysts were expecting just $0.61 a share in profits and for sales to actually dip for the period. The company also soothed investors by noting that an extensive review found no instances of stock option backdating.
Even though Mattel was already on the "must have" holiday wish lists with the runaway success of its TMX Elmo, the company is getting a surprising boost from a golden oldie. Barbie saw its worldwide sales inch 1% higher for the period. Sure, Mattel is getting healthier growth out of its Polly Pocket and Pixel Chix toy lines for girls, but Barbie was considered to be a fading brand. Reports of Barbie's demise have apparently been greatly exaggerated, as stateside sales for all things Barbie have risen every single quarter this year. Globally, this is the first quarter that Barbie sales have risen in three years!
The Inside Value recommendation has been doing things right lately. It's not just the company's successful financial turnaround and the reemergence of Barbie. Mattel has also been snapping up its stock. The repurchases have resulted in shares outstanding shrinking from 407 million to 383 million over the past year.
It also completed its purchase of Radica Games earlier this month. Radica gives Mattel a boost in handheld electronic games to compete against companies like JAKKS Pacific
One would think that this would be a trying market for the traditional toy industry, what with the launch of next generation gaming consoles by Sony
So let the games continue. Mattel is coming to play as the 2006 holiday buying season kicks off next month.
Longtime Fool contributor Rick Munarriz has bought a few Elmos over the years. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.