NEW YORK --- There will be toys for kids this holiday season, but the fight for parents' dollars looks to be a tough one for toy makers, who are facing rising costs amid the swooning economy.
Both Barbie maker Mattel Inc., the world's largest toy retailer, and rival Hasbro Inc. said as they announced third-quarter results Monday that price increases are helping offset rising costs, but noted that they could be hurt by the severity of the economic downturn.
"I appreciate that some families may have to make choices this year when it comes to buying toys for their children," Bob Eckert, Mattel's chairman and chief executive, said during a conference call with investors.
Mattel still expects toys such as Elmo Live and the Barbie Diamond Castle dolls that are tied to a DVD to do well. Hasbro is promoting toys such as the robotic animals Furreal Friends, but says it does not expect to sell as many higher-priced items as it does lower-priced ones such as action figures.
At Mattel, quarterly profit rose less than 1 percent to $238.1 million, or 66 cents per share, from $236.8 million, or 61 cents per share, last year.
Analysts polled by Thomson Reuters had expected 71 cents per share. Sales rose 6 percent to $1.95 billion, boosted by sales of its Fisher-Price and American Girl brands.
The benefit of a weaker dollar helped revenue by 2 percentage points. Analysts expected sales of $1.96 billion.
Chief rival Hasbro said profit for the quarter fell nearly 15 percent to $138.2 million, or 89 cents per share, from $161.6 million, or 95 cents, a year ago. Excluding a tax benefit in the 2007 quarter, net income would have risen about 5 percent.
"Clearly it will continue to be a very challenging environment," Hasbro's Chief Financial Officer David Hargreaves said in a conference call with investors. While he said the toy industry is recession-resistant, "given the severity of what is now happening in the global economies, we do not believe we will be unaffected and we are adjusting our expectations and spending plans accordingly."
OTHER QUARTERLY REPORTS
AMERICAN EXPRESS CO.: Profit fell 24 percent in the third quarter. The credit-card issuer said net income was $815 million, or 70 cents a share, in the July to September period, down from $1.07 billion, or 90 cents a share, in the 2007 quarter. Shares rose $2.06, or 8.5 percent, to $26.41 in after-hours trading, after rising $1.02, or 4.4 percent, to $24.35 during the regular session.
TEXAS INSTRUMENTS INC.: Maker of chips for cell phones and other gadgets warned that orders are slowing down rapidly and said it will cut 650 jobs to save money. The company essentially met analyst expectations for the quarter, earning $536 million, or 43 cents per share, down 26 percent from $758 million, or 52 cents per share, in the same quarter last year. Revenue fell 8 percent to $3.39 billion. Shares were down $1.06, or 6 percent, at $16.76 in extended trading Monday after the release of the results.
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