Toymaker Mattel beats quarterly profit estimates on cost controls
Adds analyst comment in paragraphs 9 and 10, updates share movement in paragraph 4
By Granth Vanaik
July 23 (Reuters) -Mattel MAT.O topped Wall Street estimates for second-quarter profit on Tuesday, aided by the toymaker's tight control on costs while posting a surprise drop in sales.
The Barbie maker has set a target of saving $200 million in costs by 2026 through initiatives including streamlining its supply chain and plans to exit or out-license underperforming product lines.
The company's adjusted profit of 19 cents per share beat estimates of 17 cents, according to LSEG data.
The Hot Wheels maker's shares were up 1.3% in trading after the bell. They had gained as much as 20% on Monday after Reuters reported that buyout firm L Catterton had approached Mattel with an acquisition offer.
Net sales fell 1% to $1.08 billion, amid a larger shift among consumers to spend more on experiences and services. Analysts had projected a marginal rise to $1.10 billion.
Mattel, which reiterated its annual forecasts, has struggled since the blockbuster commercial success and acclaim of the Barbie movie boosted sales last year.
CEO Ynon Kreiz said on Tuesday Mattel was well-positioned for the second-half, with new product innovation and increased retail support.
"We do expect the toy industry to decline modestly in the year, but this is an improvement from our outlook at the start of the year ... And based on our internal research, we're seeing that more consumers are planning on purchasing toys this holiday season," Kreiz added.
Monthly sales reports from Costco COST.O have indicated a pickup in demand for toys since April.
Mattel's sales should bounce back in the second-half by expanding the breadth of its brands, said Emarketer analyst Zak Stambor.
"Rolling out inclusive Barbie dolls and Fisher Price Imaginext toys featuring Batman and Star Wars should drive consumers to spend," Stambor said.
Reporting by Granth Vanaik in Bengaluru; Editing by Sriraj Kalluvila
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