Mattel surprises with sales rise as Barbie gets makeover

By Subrat Patnaik

(Reuters) - Mattel Inc reported a surprise rise in quarterly net sales, its first increase in over two years, as sales of its Barbie dolls recovered and demand rose for its Hot Wheels toys.

Mattel shares rose 6 percent in extended trading on Monday.

The toymaker launched its traditionally Caucasian Barbie doll in a variety of skin tones, hairstyles and outfits last year to appeal to a larger demography.

The company also rolled out Barbies in three new body shapes - tall, curvy and petite - last week to attract young girls, who increasingly prefer electronic toys and tablets to dolls.

Mattel has been changing its marketing and advertising strategy to position its dolls as more than a pretty face, with campaigns such as "You Can Be Anything" highlighting the potential of girls in various professional fields.

The efforts seem to be paying off, with sales of Barbie dolls rising 0.5 percent in the fourth quarter after falling in double-digit percentages in the prior eight quarters.

Mattel also reported strong sales of its Hot Wheels toys, with the release of "Stars Wars: The Force Awakens" film driving demand for its Star Wars-licensed toys such as "Jedi Starfighter Starship" and "Millennium Falcon Starship".

Sales in the Wheels category, which includes Hot Wheels toys, rose 17 percent.

Mattel's net sales inched up 0.3 percent to $2 billion in the quarter ended Dec. 31. Analysts on average had expected net sales to fall 4.2 percent to $1.91 billion, according to Thomson Reuters I/B/E/S.

The toymaker's net income surged 43.6 percent to $215.2 million, or 63 cents per share, beating the average analyst estimate of 61 cents per share.

Its advertising and promotion expenses fell 8.2 percent, while selling and administrative costs declined 7.4 percent.

"We beat our 2015 cost savings goal by about $30 million," Chief Executive Christopher Sinclair said on a conference call. "We continue to be on track to deliver at the high end of our two-year savings target of $250 million to $300 million."

The El Segundo, California-based company's shares were trading at $28.35 after the bell. The stock fell about 12 percent in 2015.

(Reporting by Subrat Patnaik in Bengaluru; Editing by Kirti Pandey)