Shares of Mattel Inc. rose 5 percent on Tuesday after the toymaker said cost-cutting and higher revenue boosted its third quarter net income by 22 percent, beating Wall Street expectations.

The El Segundo company reported net income of $366 million ($1.04 a share), compared with $301 million (86 cents) in the same period a year earlier.

Sales rose 4 percent to about $2.08 billion, with a 16 percent increase at American Girl and 6 percent rise for the Fisher-Price brand. Barbie sales were down 4 percent, but girls’ brands other than Barbie, such as Monster High and Disney Princesses, jumped 57 percent.

Analysts surveyed by Thomson Reuters on average had expected net income of 99 cents a share on revenue of $2.07 billion.

The company’s cost of sales, which includes input and direct labor costs, fell 8 percent to $962 million. Mattel's gross margin of 54 percent beat Wall Street expectations of 51 percent. Price increases, manufacturing efficiency programs and currency fluctuations were responsible for much of the margin improvement, the company said.

The improved results come as the company heads into the crucial holiday selling season.

In a conference call, Chief Executive Bryan Stockton said retailers are managing inventories tightly, but he sees increasing promotion of layaway programs and other promotions as a positive trend for the toy industry, particularly for higher priced items.

“We have worked hard to partner with retailers on these and other initiatives, and believe we’re well positioned to deliver the must-have brands and toys,” Stockton said.

Shares closed up $1.78, or 5 percent, to $37.20 on the Nasdaq.