Shares at Mattel have jumped 16 per cent after the Barbie toymaker posted strong sales of the fashion doll brand and improved profit margins.
The 60 year old doll brand and its Hot Wheels franchise both helped Mattel to better than expected earnings with revenue falling less than feared during the Christmas period.
The stringent cost-cutting efforts Mattel has also recently employed have helped the toymaker to upbeat earnings.
Barbie’s gross sales climbed 12 per cent year on year in the fourth quarter, while sales of Hot Wheels were up nine per cent. Those gains were partially offset by sales at Fisher-Price and Thomas & Friends, which fell 17 per cent. American Girl dropped 27 per cent.
For the year, Barbie sales totalled $1.09bn, marking its highest full year gross sales in five years. Meanwhile, sales of Hot Wheels totalled $834.1 million, its highest on record.
It all saw revenue fall five per cent from a year ago to $1.5bn, ahad of expectations for $1.4bn. The decline has been attributed to Toys R Us’ liquidations and a slowdown in its China business.
Meanwhile, gross margin improved to 46.6 per cent in the quarter – the first improvement for the fourth quarter since 2013 – up from 30.6 per cent in the year ago period.
Mattel announced a $650 million cost-cutting plan in 2017 and last summer said it would axe more than 2,200 jobs in its turnaround plans.
The firm also launched a film division in an effort to rival the success of the likes of Hasbro and earlier this year detailed its partnership with Warner Bros Pictures Group to develop a live action Barbie film starring Margot Robbie.
It has since detailed a Hot Wheels film.
Ynon Kreiz, chairman and CEO of Mattel, said: "Our fourth quarter results demonstrate meaningful progress in executing our strategy and significant improvement over last year.
"We remain focused on advancing our strategy to restore profitability and regain top-line growth in the short-to-mid-term and are laying the groundwork to capture the full value of our IP in the mid-to-long-term.
"After three consecutive quarters of solid, disciplined execution, we are well on our way to becoming an IP-driven, high-performing toy company and creating long-term value for our shareholders. Among all the achievements in 2018, I would like to applaud our team for regaining the number one toy company position globally in a year full of challenges and headwinds.
"This is a great moment to celebrate, before we go back and continue the hard work of implementing our multi-year turnaround."
Joseph Euteneuer, CFO of Mattel, added: "Our key financial metrics, including gross margin, operating income, and earnings per share, are all moving in the right direction and our cost savings initiative is ahead of plan entering 2019.
"Looking forward, we have ample opportunities to improve our financial performance across the board as our business strategy continues to gain traction in the marketplace."