Strength of doll brands like Barbie and Monster High around the world helped Mattel's net income rise 16 per cent in the third quarter, a positive sign ahead of the all-important holiday season.
Its performance beat Wall Street expectations and shares rose nearly 5 per cent in morning trading.
The quarterly results come as toy makers gear up for the holiday season, which can account for up to half of their annual revenue. Toy sales overall have been weak in North America, Europe and Australia, due to a weak video game market, an uncertain economy and continued popularity of electronic gadgets like smartphones and tablets. But Mattel, the largest U.S. toy maker with many popular brands, has fared better than its competitors.
"I am pleased with where we are, as we head into the holiday season," said CEO Bryan Stockton in a call with analysts. "On the sales side we grew revenue in every region of the world."
Barbie, the No. 1 doll brand, reversed four straight quarters of sales decline to increase 3 per cent during the quarter. Dolls in general continued to be a strong category, with sales of Monster High and American Girl also rising.
Fisher-Price brands remained a weak spot with flat sales. Hot Wheels also remained challenged with sales down 2 per cent.
As the government shutdown and the impasse in Congress weigh on consumers' minds, Stockton said that he does not expect the uncertainty to affect Christmas sales that much.
"Every year, there's always something that happens in the industry: Hurricanes, dock strikes, U.S. politics," he said. "Christmas always comes on Dec. 25 and there are always toys under the tree for kids."
For the three months ended Sept. 30, the largest U.S. toy company earned $422.8 million, or $1.21 per share. That's up from $365.9 million, or $1.04 per share, in the prior-year period.
Removing a tax benefit of 5 cents per share, earnings were $1.16 per share. Analysts predicted earnings of $1.11 per share.
Revenue for the El Segundo, Calif., company rose 6 per cent to $2.21 billion from $2.08 billion. Wall Street expected $2.175 billion in revenue.
In North America, gross sales climbed 3 per cent. International gross sales increased 9 per cent.
Mattel Inc. also declared a fourth-quarter dividend of 36 cents per share. The dividend will be paid on Dec. 13 to shareholders of record on Nov. 27.
Mattel shares rose $2.41, or 5.8 per cent, to $43.96 in premarket trading 90 minutes ahead of the market opening.
Mattel's smaller rival Hasbro reports its quarterly financial results on Monday.
AP Writer Michelle Chapman in New York contributed to this report.