Strong holiday sales of key brands like Barbie and Hot Wheels boosted Mattel 's latest results, but it's the 12% bump in fourth-quarter revenue at American Girl that shows the toy

company is on the rebound. It was the first time in four years that the doll brand grew quarterly sales. In the fourth quarter of 2019, American Girl sales fell 20%, pulling down the entire

doll category, which declined 6% year over year. This year, fourth-quarter sales of dolls rose 13% year over year. The growth was all the more impressive because it came at a time when the

brand's flagship stores were seeing fewer shoppers and tourist sales dried up during the pandemic. In the spring when stores were first closed by coronavirus restrictions, Mattel put

only turning the brand around but many parts of the business which had been lagging." When Ynon Kreiz took the helm in 2018, he was the fourth CEO in four years to take control of the

company. At that time, Fisher-Price, Barbie and American Girl were struggling to connect with changing consumer tastes and Mattel was reeling from the recent bankruptcy of Toys R Us. Kreiz,

who will celebrate his third year as CEO in April, has had a long-term vision for the toy company that is focused on using its own powerful brands to grow sales. To do this, Kreiz has built

a film department within the company to produce more than a dozen features with major Hollywood studios. Already in the works are films featuring Barbie, Hot Wheels, Magic 8 Ball, Major Matt

Mason and American Girl. The aim is to create fresh content with connected toy lines to fuel sales. There are no official release dates set for any of these films. But to get there, the

company had to first cut costs and then reinvigorate its iconic brands. On Tuesday, Mattel posted fourth-quarter earnings of $130.5 million, or 37 cents a share, compared with earnings of

$200,000 a year ago, which were breakeven on a per-share basis. Excluding items, Mattel earned 40 cents a share, which was higher than the 23 cents a share, analysts were expecting,

according to Refinitiv. Sales climbed 10% to $1.63 billion, outpacing the $1.58 billion analysts expected. Mattel shares rose in extended trading after the results were released Tuesday, but

the stock was recently down about 3% in trading Wednesday. Mattel shares have risen nearly 28% over the past year, bringing its market value to $6.5 billion. The growth has moderated in

recent weeks. In the last month, shares of the company have risen 2.9%, but its three-month gains is over 33.5%. At least seven analysts have boosted price targets for the stock, with

highest being D.A. Davidson at $23, which would imply a nearly 28% gain from curent levels. Kreiz will continue his cost-cutting effort, with the goal of saving an additional $250 million in

costs by 2023. Mattel expects the restructuring program to cost $100 million to $125 million. The American Girl rebound The sales growth at American Girl shows that Kreiz's plan is

coming to fruition. While the company hasn't released any new film content, its cost-cutting measures have allowed it to invest money in new ventures, like direct-to-consumer. "

Online has been a growth driver for American Girl and toys for many years but was amplified and accelerated by the pandemic," said Stephanie Wissink, managing director at Jefferies.

"American Girl has been closing mall-based retail stores and discontinuing wholesale agreements and focusing more exclusively on e-com." Prior to 2020, the American Girl brand was

intrinsically tied to brick-and-mortar retail. But the doll's success had inspired a lot of copycat brands that mimicked American Girl's style but at a lower price. The brand was

struggling to stand out. Although American Girl dolls could be purchased online, it wasn't Mattel's main strategy. Much of its marketing was put towards promoting the experiential

retail stores with their cafes and doll hair salons and its mailed catalog. However, when the pandemic hit and retailers were forced to shutter, Mattel put more investments towards online

sales across its entire portfolio. "I know the [direct-to-consumer] had been up in prior quarters, it was just the store closures that was dragging performance down," said Gerrick

Johnson, analyst in BMO Capital Markets. "So American Girl had been doing better, that performance had just been masked by the declines from store closures." In the third quarter

2020, American Girl sales were down 1%, and direct-to-consumer sales accounted for more than half of all of its doll sales. Mattel said Tuesday the brand's online sales "almost

fully compensated" for the reduction in the brand's retail business. The brand also saw a rise in new customers and average order value. Dolls has been one of Mattel's leading

categories. For the full-year it surged 9%, as many parents turned to Barbies to entertain children during the pandemic. The Covid effect Mattel's strategy also got a boost because of

the coronavirus pandemic. Widespread lockdowns and school closures led parents to seek out toys as a way to reduce screen time and keep kids busy. Parents were also able to afford more toys

during the year because their disposable income wasn't being spent on other types of entertainment and was being boosted by federal stimulus checks. In 2020, the toy industry sales

jumped 16% to $25.1 billion in the U.S., according to the NPD Group. Notably, sales of fashion dolls and accessories across the toy industry spiked 56%. Across the industry, online shopping

gained momentum, as parents shied away from shopping in stores and retailers offered more purchase options like buy online, pickup in-store and curbside pickup. Rival Hasbro , which reported

earnings Monday, said it garnered more than $1 billion in e-commerce revenue globally during the year, an increase of 43% from 2019. Both Mattel and Hasbro are set to divulge more of their

post-pandemic strategies in just a few weeks. Mattel hosts an investor day on Feb. 24, then Hasbro takes its turn on Feb. 25. Kreiz is realistic about the challenges. He foresees tough

comparisons later this year, as the company laps strong growth from pandemic sales. Still, e-commerce will continue to be a strong sales driver for Mattel, he said. In 2020, e-commerce

represented a third of Mattel's global point of sale and it ended the fourth quarter as the number one toy manufacturer in e-commerce in the U.S., according to NPD. "The fourth

quarter and full year demonstrated the resilience of the toy industry and the priority that parents place on quality toys, trusted brands and purposeful play," Kreiz said.