(Reuters) – Mattel Inc (MAT.O) reported a surprise jump in quarterly revenue on Tuesday as newer models energized demand for its flagship Barbie brand, while the launch of dolls based on Korean pop-sensation BTS lifted international sales.
FILE PHOTO: Mattel’s Barbie doll is seen on display at the 114th North American International Toy Fair in New York City, U.S., February 21, 2017. REUTERS/Stephanie Keith
The U.S. toymaker’s shares rose nearly 20% in extended trading.
Worldwide Barbie gross sales rose 10% to $412.8 million in the third quarter, while analysts had expected a 1.2% drop on fears that demand would ease in the run-up to the release of the Disney princess movie “Frozen 2”, the doll rights to which are owned by Hasbro Inc (HAS.O).
Mattel’s international gross sales rose 10% to $721.7 million, lifted by sales of dolls based on Korean boy band BTS, which has dominated international music charts.
Mattel bagged the rights for dolls based on the seven-member band earlier this year.
BTS and Barbie, which has been modernized with variants of based on popular celebrities, role models, different skin tones and professions, helped lift worldwide doll sales by 5%.
“The story around BTS shows how we’re able to capture cultural trends and commercialize them,” Chief Executive Officer Ynon Kreiz told Reuters.
Mattel, unlike rival Hasbro, said it was not seeing any cancellations by its retail partners ahead of a Dec. 15 U.S. tariff deadline on Chinese toy imports.
“At this stage, we are not seeing any impact from tariffs and we don’t expect anything this year,” Kreiz said, adding consumer sentiment was strong heading into the crucial holiday season.
Hasbro missed quarterly profit estimates earlier this month, blaming higher shipping and warehousing costs from the uncertainty around tariffs.
Mattel also disclosed material weaknesses in its internal control over financial reporting and said Chief Financial Officer Joseph Euteneuer will leave the company.
The disclosure was a result of an investigation by the company into an anonymous whistleblower letter that was made public in August.
The investigation found that income tax expenses were misstated in the third and fourth quarters of 2017, and while there was no impact on full-year financials, the error was not reported to then-CEO Margaret Georgiadis.
The toymaker had canceled a debt sale in August after receiving the letter.
Euteneuer, who was appointed as finance chief in 2017, will leave after a transition period of up to six months. The company is conducting a search for its next CFO.
Mattel’s third-quarter net sales rose 3% to $1.48 billion from a year earlier, while analysts had expected a fall of 0.5%.
Excluding items, Mattel earned 26 cents per share, 10 cents above estimates.
Reporting by Uday Sampath in Bengaluru; Editing by Sriraj Kalluvila and Maju Samuel