But Robert Eckert told Reuters in an interview that higher commodity and labour costs would force the world’s leading toymaker to increase prices this year, noting a rise in the currency of China, where it makes a majority of its products.
“I am very optimistic about 2008 for Mattel and the toy industry on the whole,” Eckert said.
“I think last year’s recall news is behind us and the industry in general … I just have a real sense of optimism about 2008.
“We are always mindful of what is going on in economies, but if you look at history, the toy industry has always held up very well in tough economic times and I think this will remain the case,” he said.
Despite posting a better-than-expected profit for the fourth quarter – earnings rose to $328.5m from $286.4m a year earlier – operating profits fell as a result of increased costs, notably from the extensive recalls.
Mattel recalled over 21 million Chinese-made toys worldwide in 2007 due to excessive levels of lead paint and other unsafe components, stoking fears of a loss in consumer confidence.
“The cost of the recalls or product returns from consumers or retailers is behind us,” Eckert said.
But he added: “I am concerned about commodity costs and labour costs in Asia. The Chinese currency is appreciating, so I think it will be a challenging year for costs.
“As a result we will work very hard on reducing our controllable costs, not related to commodity costs, and we will have to raise our prices as well.”
A worldwide economic slowdown has been fuelled by market turbulence, uneasy exchange rates and weaker growth in Europe and the United States, the latter facing a possible recession.
“People still buy toys, no matter. They may have tough times themselves, may cut back on spending on very large items such as vacations, for example, but children will always have a good Christmas,” Eckert said.
Sales of Mattel’s flagship Barbie doll dipped dramatically in the United States last year, falling 12 percent in the fourth quarter, but Eckert said the popular doll remained a “key driver” for his company.
“Barbie is still the number one fashion doll in the world. It is the number one toy property in the world. Barbie is still a very important property in the toy market,” he said.
“We have had good growth with Barbie outside of the US, but we struggled in the US in 2007, following an improved 2006.
“So we have a lot more work to do with Barbie in basic doll play and innovation … we will be unveiling a few new lines on Barbie. One I really like is “I-Design” … a digital Barbie,” he added.
Eckert said the toymaker also intended to add to its popular range of T.M.X Elmo toys – small, red, furry Muppet characters from the children’s television show Sesame Street. “A new Elmo will be introduced this year. This Elmo is the real deal,” he said.