Lawsuit Cost Hits Mattel’s Profit

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Despite higher revenue, Mattel Inc.’s first quarter earnings fell 33 percent due to higher expenses, including the cost of pursuing its Bratz doll lawsuit against rival toymaker MGA Entertainment Inc.

The El Segundo company on Friday reported net income of $16.6 million (5 cents per share), compared with $24.8 million (7 cents) a year earlier. Net sales rose 8 percent to nearly $952 million.

Analysts surveyed by Thomson Reuters on average expected per-share profit of 5 cents on revenue of $903 million.

Revenue in the Barbie unit was up 14 percent, and its other doll lines also did well. American Girl sales rose 4 percent, and “other girls brands” – which include Monster High and Disney Princess products – jumped 38 percent

Hot Wheels sales rose 6 percent, but revenue from the Fisher-Price unit for younger children was down 2 percent. The company said the decline was largely due to the end of a licensing deal for Sesame Street-branded products.

The company expects summer sales to be strong due to movie tie-ins related to the latest in Disney/Pixar “Cars” animated film franchise and the new Warner Brothers’ superhero film “Green Lantern.” First quarter sales in the company’s entertainment unit were up 13 percent on early sales of “Cars 2” and Green Lantern products, as well as its Toy Story line.

“Our diverse portfolio of brands and countries has once again allowed us to deliver on our goal of consistent growth,” Chief Executive Robert A. Eckert said in a statement. “Additionally, we are well positioned to improve operating margin and deliver strong cash flow for the year.”

The company had $18.2 million in costs related to its ongoing legal battle with MGA. A federal jury in Santa Ana on Monday began deliberations in a retrial of Mattel’s copyright and trade secrets lawsuit against MGA.

Shares were up $1.25, or 4.8 percent, to $26.99 in midday trading on the Nasdaq.