MAT Mattel Inc

Strong sales of Barbie and toys tied to the "Toy Story 3" movie helped Mattel Inc.'s (MAT) second-quarter profit more than double, though earnings fell slightly short of analysts' expectations.

Revenue increased 13%, in line with estimates, to $1.02 billion as sales connected with "Toy Story 3" made a "stellar contribution," according to Mattel Chairman and Chief Executive Robert Eckert. But the strengthening of the dollar hurt sales by 3 percentage points at Mattel, which generates about 20% of its sales in euros.

"With the all important second half of the year ahead of us, I am encouraged by the strong momentum of our product line," Eckert said.

Shares of the world's largest toy maker by sales were down 4.6% in premarket trading at $21.95 as analysts' hopes for better-than-expected results had been building in recent weeks. Mattel shares have risen 15.1% year to date, outperforming broader markets.

Shares of Hasbro Inc. (HAS), which reports results Monday, were inactive premarket but have risen 28.2% so far this year.

"A very strong quarter," said Sterne Agee analyst Margaret Whitfield. "Q2 is very small in the scheme of things, but I think the company has the best portfolio of brands for the important back half of the season."

Mattel reported a profit of $51.6 million, or 14 cents a share, up from $21.5 million, or 6 cents a share, a year earlier.

Analysts polled by Thomson Reuters most-recently estimated earnings of 15 cents a share and $1.02 billion in revenue.

Mattel's selling and administrative expenses, though lower as a percentage of sales than a year earlier and than the first quarter, rose 12% and were slightly higher than Whitfield had forecast. But Mattel's tax rate was also lower than many analysts expected.

Analysts said they hoped to hear more on Mattel's 8:30 a.m. EDT conference call about cost and expense pressures and about retailers' inventory levels heading into the back half of the year. "Their inventories look good," Whitfield said. Mattel's inventories rose 1.4% against the 13% sales increase.

The El Segundo, Calif., company has seen results improve recently after struggling with dwindling sales during the recession. Its iconic Barbie continued its rebound from last year, with second-quarter sales up 6% against a 15% drop in the prior-year period.

Mattel, which has been cutting costs the past year, also expanded its toy selection by licensing toys related to recent movies and television shows, such as Thomas & Friends and World Wrestling Entertainment Inc. (WWE), with a most recent addition of Toy Story 3. Fitch Ratings in May upgraded the company's ratings, saying the big scope of products will help Mattel's performance, and Mattel has struggled to keep up with demand for WWE products.

Past cost cutting helped gross profit margin rise to 48.1% from 45.2%, in line with mean analyst forecasts.

Sales at Mattel's girls and boys brands unit, its biggest arm and the one that includes the Barbie and Wheels segments, rose 21%. That was led by a 60% surge in the entertainment segment, primarily driven by "Toy Story" and World Wrestling Entertainment products. Meanwhile, Fisher-Price sales increased 4% while American Girl dropped 4%.

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

(Jodi Xu contributed to this report.)

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