Mattel Inc. shares climbed after it logged its first revenue gain in two years, signaling Chief Executive Officer Ynon Kreiz’s plan to revamp the toy company’s biggest brands is working. “We’re making real, tangible progress,” he said in an interview.

• Revenue climbed 2.3 per cent from a year ago to US$860.1 million in the second quarter, beating analysts’ expectations. Mattel still hasn’t returned to profitability, reporting an adjusted loss per share of 25 cents, but that’s better than the 40-cent loss Wall Street had been forecasting. Mattel remains “on track to restore profitability and regain top-line growth in the short to midterm,” its CEO said.

Key Insights

• After a little more than a year on the job, Kreiz is making the case that he’s stabilized the toymaker following five straight years of revenue declines. Mattel’s North American sales rose 2.5 per cent, in part helped by a double-digit spike for Barbie.
• Still, there are challenges ahead. Barbie has more competition in store, with rival Hasbro Inc.’s new launch of Frozen dolls expected during the holiday season. Also, Mattel’s Hot Wheels brand declined in its home market, a rare blip for a usually strong property. Kreiz, who spent his career in Hollywood before joining Mattel, has been trying to transform Mattel into an IP-driven company, an approach that competitor Hasbro has successfully deployed.
• The company’s chief said Thursday that Mattel has already exceeded his US$650 million cost-cutting initiative for 2019 and now boasts a run-rate savings of US$754 million. It expects to shave another US$100 million off by year-end. Those savings help cushion the 2018 fallout from the loss of major customer Toys “R” Us. “In terms of what’s coming up in the second half, now we’re out of the Toys ‘R’ Us impact zone,” Kreiz said.

Market Reaction

• Mattel’s shares rose 5 per cent as of 4:08 p.m. in New York. They had already climbed 25 per cent through Thursday’s close.