Mattel Inc.'s third-quarter revenue nudged barely higher as surging Barbie sales and a rebound in its high-end American Girl business plugged the loss of sales from two major Walt Disney Co. licenses.

Worldwide sales of Barbie rose 16% for the period, continuing momentum after a 23% increase in the second quarter. The string of positive results from Barbie, which has broadened the doll line to include more skin tones and body sizes, is helping dig the iconic doll brand out of a deep slump that prompted major changes at Mattel in recent years.

"While we still have a critical fourth quarter to execute, we remain broadly on track to deliver on our full-year outlook," Mattel Chief Executive Christopher Sinclair said.

The results set up Mattel as it enters the all-important holiday season, when around 50% of annual toy sales are made. The U.S. toy industry is in the midst of a strong stretch, with sales projected to rise 7% this year after a 6.7% increase in 2015, according to the research firm NPD Group Inc.

Mattel shares, up more than 13% this year, were unchanged after hours at $30.62.

The sharp increase in Barbie sales, combined with continued increases in brands like Hot Wheels and more recent turnarounds in long struggling ones like American Girl and Fisher-Price, are helping soften the blow from the loss of the coveted Disney licenses to sell dolls based on classic princess characters and from the recent movie "Frozen." Mattel lost that business to rival Hasbro Inc. earlier this year, leaving a sales gap of $439.9 million for the year, including $158 million in the third-quarter alone.

Hasbro, which took over the Disney licenses earlier this year, enjoyed the benefits of the Disney-theme dolls that helped buoy its sales among girls, leading to a 14% increase in third-quarter sales.

Over all, Mattel reported a profit of $236.3 million, or 68 cents a share, up from $223.8 million, or 66 cents a share, a year earlier. Excluding severance and restructuring costs, per share earnings were flat at 70 cents a share.

Sales rose slightly to $1.80 billion but would have been 2% higher when adjusted for currency swings. Sales rose 3% in the North America region and declined 4% in the international division.

Analysts surveyed by Thomson Reuters had projected per share earnings of 71 cents a share on $1.77 billion in sales.

Gross margin fell to 48.5% from 49.1%, primarily due to currency effects.

Sales at American Girl rose 14%, the first quarterly gain in a year. The division had been struggling as parents balk at the high-end price of more than $100. Mattel has since introduced a lower priced line of American Girl dolls and is expanding distribution to other retailers, including Toys "R" Us and Kohl's.

Mattel's division encompassing girls and boys brands posted a 5% decline in sales for the quarter, with the loss of the Disney business and a slump among its Monster High doll dragged down results. That was offset by gains in Barbie, a 6% sales increase in its Wheels division, which include Hot Wheels and Matchbox, and 16% increase in its entertainment division, which includes games.

Fisher-Price sales rose 6% while its construction and arts and crafts division was flat.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

 

(END) Dow Jones Newswires

October 19, 2016 16:35 ET (20:35 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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