MAT Mattel Inc

Mattel Inc. (MAT) swung to a surprise first-quarter profit as strong sales of new toys tied to movies and favorable foreign-currency exchange aided results.

Profitability also was helped by lean retailer inventories heading into the period and by ongoing cost controls.

Shares of the largest U.S. toy maker rose 4.4% to $24.80 in premarket trading--above its 52-week high of $23.79--as the positive results beat many of the most optimistic forecasts on Wall Street. Mattel shares had risen 82% in the past year heading into Friday's report.

Shares of Hasbro Inc. (HAS), which reports results Monday, were inactive in premarket trading.

Wells Fargo Securities analyst Tim Conder said Mattel's results seem like a great quarter "any way you cut it."

Retailers' tight management of inventories throughout the recent Christmas season and Mattel's own control of its supply chain "indicates the global channel is very clean, boding well for continued off-season restocking" and likely modest inventory build, on a year-over-year basis, heading into the 2010 holiday season, he said.

Mattel reported a profit of $24.8 million, or 7 cents a share, compared with a prior-year loss of $51 million, or 14 cents a share. Revenue increased 12% to $880.1 million, with 3 percentage points due to the impact of the weakening dollar on international sales.

Analysts polled by Thomson Reuters had most recently forecast a loss of 3 cents a share on $860 million in revenue.

"I am pleased with the performance across our portfolio of brands, including our core brands and our licensed evergreen brands, especially our newest properties--World Wrestling Entertainment, Thomas and Friends, and Toy Story," Chairman and Chief Executive Robert Eckert said Friday.

Gross margin widened to 49.1% from 44%, and selling, general and administrative expenses as a percentage of sales fell by more than 7 percentage points.

After struggling with dwindling sales of its famous toys, the maker of Barbie and Hot Wheels has seen stronger demand for its iconic doll recently. Mattel also has improved its lineup of toys based on popular movies and television shows.

First-quarter sales of Mattel's girls and boy brands unit, its biggest arm and the one that includes Barbie and Hot Wheels, rose 14% as Barbie logged 5% growth. The Wheels segment, which includes Hot Wheels, Matchbox and Tyco R/C, rose 3%.

Meanwhile, Fisher-Price sales increased 11% and American Girl sales rose 6%.

-By Jodi Xu, Dow Jones Newswires; 212-416-3037; jodi.xu@dowjones.com

-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145; maryellen.lloyd@dowjones.com

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