The numbers: Mammoth toymaker Mattel posted an impressive quarterly profit of $38.5 million, or $0.11 per share, easily eclipsing analystexpectations of $0.08 per share. Revenue jumped 7% from a year earlier, beating expectations as well; Mattel’s quarter benefitted from soaring sales of its American Girl dolls, which rose a whopping 32%.
The takeaway: The toy industry has been weak of late, due to the sluggish economy. But Mattel’s strong showing this past quarter—despite dips in Barbie, Hot Wheels and Fisher Price sales—is encouraging, not least since the company did especially well in Europe. That may not mean much for the broader toy industry though, as Mattel has proven less of a bellwether than an anomaly in recent months.
What’s interesting: There’s been plenty of speculation about how mobile devices and new technologies are changing how kids and parents play. Children now spend about 7½ hours a day consuming media on screens, up by almost 1½ hours since 2005 (paywall). While companies like Mattel rush to turn plastic toys into apps, the question isn’t whether toy companies will embrace digital—because, let’s face it, they must—but rather how an industry used to churning out toys that remain substantially the same for years can adapt to the fast-changing digital space.