(Bloomberg) -- Mattel Inc.’s turnaround had been overshadowed this year by two big hurdles -- a lack of consistent sales growth and an internal probe into its accounting practices. The toymaker overcame both of these issues on Tuesday, sending shares soaring.
Revenue, powered by robust gains from Barbie and Hot Wheels, rose 3.1% to $1.48 billion, topping analysts’ estimates, which called for a small decline. That gain was the biggest since 2013.
Simultaneously, Mattel said it resolved a whistleblower allegation that derailed a $250 million bond sale earlier this year. The company will restate the last two quarters of earnings from 2017, but the changes won’t have a financial impact. Chief Financial Officer Joe Euteneuer, who joined the company just as the accounting issues arose, will leave Mattel after a transition period.
The company’s performance also contrasted with larger rival Hasbro Inc., which last week blamed disappointing results on customers changing and canceling orders ahead of U.S. tariffs on Chinese imports slated to take effect in December.
“We didn’t see any impact from tariffs in the quarter and we don’t expect any for the year,” Mattel Chief Executive Officer Ynon Kreiz said Tuesday in an interview. “We’ve had solid, consistent execution.”
Kreiz, who took over about 18 months ago, has two prongs to his plan. The first is stabilizing the core business of making dolls and action figures. The second is better utilizing its brands by pushing further into entertainment, such as with feature-length films, streaming shows and amusement parks.
Mattel shares rose as much as 21% in late trading. The stock had advanced 5.7% this year through Tuesday’s close, trailing a 21% gain in the benchmark S&P 500 Index.
In North America, sales were little changed at $822 million, meeting the company’s expectations, Kreiz said. International revenue climbed 10%, driven by gains in Asia.
The company determined after reviewing the letter from an anonymous whistleblower sent to its auditing firm that the toymaker had understated an income tax expense in the third quarter of 2017, and overstated it by the same amount in the fourth quarter, with no impact for the full year or on subsequent periods. It did find, however, that the company had a material weakness in its internal control over financial reporting. Mattel pledged to fix the issue.
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