Mattel Inc. (NASDAQ:MAT) stock was up 7% in mid-afternoon trading on January 7. Shares have surged 12.7% over the past week on the back of a significant rally for U.S. stocks. Mattel stock has still dropped 28% over the past three months.
In the third quarter Mattel saw North American sales experience their highest sales growth since Q4 2015. Mattel managed to recapture its position as the number one toy company in the world in the four months through to September 2018.
Operating income rose 41% year-over-year to $122 million. This was the first time in eight quarters Mattel had posted positive year-over-year growth in this category. However, sales were still down 8% from the previous year.
The United States saw strong consumer spending over the holiday season, which has likely given investors some added hope in the new year. According to Mastercard SpendingPulse, total U.S. retail sales excluding automobiles rose 5.1% year-over-year to more than $850 billion in the period from November 1 to Christmas.
Mattel has seen its stock fall steadily since late 2013 with competition in the international toy market heating up, and growth in North American becoming more of a challenge.
The industry is also facing a shift to digital options that could represent an existential threat to companies like Mattel. Currently Mattel stock boasts an RSI of 49, indicating a neutral rating after it fell into oversold territory in late December.
The retail bounce back over the holiday season is encouraging, but broader headwinds should steer investors elsewhere as Mattel prepares to release its fourth-quarter earnings in early February.
