Mattel 2nd-quarter profit tops Wall Street estimates

Mattel 2nd-quarter profit tops Wall Street estimates

Stock Market Predictions

NEW YORK (Global Markets) - Mattel Inc (MAT.O), the world's largest toy company, reported a higher-than-expected quarterly profit on strong sales of its Barbie dolls and toys based on the "Cars 2" movie.

The sales increase shows the growing global reach of Mattel. International sales increased 12 percent, excluding currency fluctuations.

"They're looking to have a great year," said Wedbush Securities analyst Edward Woo. "They've gained market share and they're likely to continue to maintain that momentum into the holiday season."

The shares had been up more than five percent, but they gave back some of their gains because they are getting close to their fair value, said MKM Partners analyst Eric Handler, whose price target is $28.

Now the question is whether the shares will keep rising in the run-up to the holidays.

Woo thinks that could happen and his price target is under review. The company is in a position to grow earnings by at least 10 percent on a revenue increase in the mid to high single digits, he said.

"Barbie is getting big internationally," said Handler. "The whole company has become more internationally focused."

The maker of Hot Wheels cars and Fisher-Price toys said second-quarter net profit rose to $80.5 million, or 23 cents per share, from with $51.6 million, 14 cents per share, last year.

U.S. toy companies, which make most of their toys in China, are grappling with rising costs of plastics, packaging paper, freight and labor. Mattel's gross margins fell 20 basis points.

"Costs have been rising, but it's manageable for them," Woo said.

Sales at the company, which counts Wal-Mart Stores Inc (WMT.N), Toys R Us (TOYS.N) TOY.UL and Target Corp (TGT.N) as its biggest customers, rose 14 percent to $1.16 billion.

Analysts on average expected earnings of 16 cents a share, on sales $1.11 billion, according to Thomson Global Markets I/B/E/S.

The company's shares were up nearly 2 percent at $27.29 in midday trading. They have risen 6.3 percent so far in 2011. They trade at about 13.1 times forward earnings, well above the sector average of 7.9. Rival Hasbro Inc's (HAS.O) shares trade at a multiple of about 13.9.

(Additional reporting by Dhanya Skariachan and Nivedita Bhattacharjee in Bangalore; editing by Maju Samuel, Steve Orlofsky and Andre Grenon)

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Timberland disappoints as margins shrink; shares plunge

Timberland disappoints as margins shrink; shares plunge

Stock Market Predictions

BANGALORE (Global Markets) - Timberland Co (TBL.N) said it expects margins to remain under pressure this year as the shoemaker battles rising product and labor costs, sending its shares plunging 32 percent.

The company, known for its rugged outdoor footwear brands such as Earthkeepers, Howies and Mountain Athletics brands, also posted a quarterly profit that missed Wall Street expectations for the first time in seven quarters.

Timberland has consistently warned of margin pressures from rising leather, labor and transportation costs this year.

The Stratham, New Hampshire-based company said it delayed meaningful price increases to deal with the higher costs to the second half of 2011.

The company also said it would invest in marketing to drive sales growth over the second half of the year.

"(Timberland's) miss was pretty shocking. They surprised the market in terms of how much they are spending on investments," Wall Street Strategies analyst Brian Sozzi told Global Markets.

"One area of investment is China and the other is technology to support their store growth initiatives."

The results are in contrast to the better-than-expected earnings of rivals Wolverine Worldwide Inc (WWW.N) and Deckers Outdoor (DECK.O).

Skechers USA Inc (SKX.N), however, posted a smaller-than-expected first-quarter profit on declining demand for the once-hot toning shoes.

For the quarter ended April 1, Timberland earned 35 cents a share, missing analysts' expectations of 59 cents a share, according to Thomson Global Markets I/B/E/S.[ID:nASA022NO]

Timberland's shares dived 32 percent to a three-month low of $28.10 on Thursday on the New York Stock Exchange. The meltdown has wiped out around $650 million of the company's market value.

(Reporting by Viraj Nair in Bangalore; Editing by Maju Samuel and Saumyadeb Chakrabarty)

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