Barbie leads Mattel's fightback as profits rise after years of decline

A focus on new marketing and lower prices begin to yeild results as toy maker starts turnaround

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[Twitter/Mattel]

After years of decline Barbie is turning a profit once again, with Mattel announcing a sales increase of 1% in the fourth quarter of 2015.

The results bring to a halt to eight uninterrupted periods of double digit declines for the Barbie line, Nasdaq.com reports.

The US toy making giant has also seen its overall sales increase for the first time in two years, with a strong Christmas season driving the turnaround.

Mattel’s Fisher Price brand has also enjoyed a bump, rising 13% in the fian quarter.

Worldwide gross sales for mattel in the final quarter are up 3% - with Barbie sales enjoying an 8% rise, while Hot Wheels gross sales had a 28% jump. 

The Revival of Barbie and Fisher Price

Mattel CEO Christopher Sinclair, who joined the company in 2015, has led a drive to stabilise both the Barbie and Fisher Price brands through a combination of a new marketing push and lower prices.

"Overall, we're very encouraged," Sinclair said in a conference call with analysts and investors, the LA Times reports.

"We achieved our goal of stabilizing the business," he added.

Mattel last week announced the launch of a new line of Barbie dolls – with the Fahionista line offering 33 new dolls – with consumers able to choose from different combinations of skin colour, hair colour, eye colour and body shape.

The announcement has garnered global attention as a landmark move in children’s toy-making.

The toy industry in general has enjoyed an upturn in fortunes, with research firm NPD group reporting an industry wide increase of 6.7% overall, with the Star Wars line of toys credited with playing a large role in bringing about the impovement in industry sales.

The company has reported the following results

Fourth Quarter Highlights 

- Worldwide gross sales up 3% in constant currency, and down 4% as reported.

- Barbie worldwide gross sales up 8% in constant currency, and 1% as reported; Fisher-Price worldwide gross sales up 13% in constant currency, and 8% as reported; Hot Wheels worldwide gross sales up 28% in constant currency, and 18% as reported.

- Adjusted operating income of $310.5 million, compared to $265.1 million in the prior year, and reported operating income of $294.1 million, compared to $237.0 million in the prior year, up 59% in constant currency, and 24% as reported.

- Adjusted earnings per share of $0.67, compared to $0.49 in the prior year (including discrete tax items in both periods), and reported earnings per share of $0.63, compared to $0.44 in the prior year. Adjusted and reported earnings per share reflect the negative impact from changes in currency exchange rates of $0.18.

Full Year Highlights

- Worldwide gross sales up 1% in constant currency, and down 6% as reported.

- Barbie worldwide gross sales down 1% in constant currency, and 10% as reported; Fisher-Price worldwide gross sales up 7% in constant currency, and 1% as reported; Hot Wheels worldwide gross sales up 22% in constant currency, and 11% as reported.

- Adjusted operating income of $640.3 million, compared to $765.3 million in the prior year and reported operating income of $540.9 million, compared to $653.7 million in the prior year, up 9% in constant currency, and down 17% as reported.

- Adjusted 2015 earnings per share of $1.31, compared to prior year earnings per share of $1.71 (including discrete tax items in both periods), and reported 2015 earnings per share of $1.08, compared to prior year earnings per share of $1.45. Adjusted and reported earnings per share reflect the negative impact from changes in currency exchange rates of $0.41.