Mattel 2011 Annual Report Download - page 40

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consolidated gross sales in 2010. Gross sales in international markets increased 12% in 2011, including favorable
changes in currency exchange rates of 3 percentage points.
Worldwide gross sales of Mattel Girls & Boys Brands increased 13% in 2011 to $4.15 billion, with
favorable changes in currency exchange rates of 1 percentage point. Domestic gross sales of Mattel Girls & Boys
Brands increased 9% and international gross sales increased 17%, with favorable changes in currency exchange
rates of 3 percentage points. Worldwide gross sales of Barbie®increased 12%, with favorable changes in
currency exchange rates of 2 percentage points. Domestic gross sales of Barbie®increased 8% and international
gross sales increased 14%, with favorable changes in currency exchange rates of 2 percentage points. Worldwide
gross sales of Other Girls products increased 27%, with favorable changes in currency exchange rates of
1 percentage point, driven primarily by higher sales of Monster High®and Disney Princess®products, partially
offset by lower sales of Polly Pocket®and Little Mommy®products. Worldwide gross sales of Wheels products
increased 2%, with favorable changes in currency exchange rates of 1 percentage point, driven primarily by
higher sales of Hot Wheels®products internationally. Worldwide gross sales of Hot Wheels®increased 6%, with
favorable changes in currency exchange rates of 2 percentage points. Worldwide gross sales of Entertainment
products increased 16%, with favorable changes in currency exchange rates of 2 percentage points, driven
primarily by higher sales of CARS 2®products, partially offset by lower sales of Toy Story®3 products.
Worldwide gross sales of Fisher-Price Brands decreased 3% in 2011 to $2.16 billion, with no impact from
changes in currency exchange rates. Worldwide gross sales of Fisher-Price Brands were relatively flat with 2010,
excluding sales related to the Sesame Street®license in 2010. Domestic gross sales of Fisher-Price Brands
decreased 4% and international gross sales were flat with 2010, with favorable changes in currency exchange
rates of 2 percentage points. Worldwide gross sales of Core Fisher-Price®increased 2%, with favorable changes
in currency exchange rates of 1 percentage point. Domestic gross sales of Core Fisher-Price®increased 2% and
international gross sales increased 3%, with favorable changes in currency exchange rates of 2 percentage points.
Worldwide gross sales of Fisher-Price®Friends decreased 19%, with favorable changes in currency exchange
rates of 1 percentage point, driven primarily by the discontinuation of the Sesame Street®license. Domestic gross
sales of Fisher-Price®Friends decreased 26% and international gross sales decreased 10%, with favorable
changes in currency exchange rates of 1 percentage point.
American Girl Brands gross sales increased 5% to $510.9 million in 2011, driven primarily by sales from
the American Girl®virtual world and Kanani®, the 2011 Girl of the Year®doll, and the benefit of two new
American Girl®stores in McLean, Virginia and Lynwood, Washington, which opened in June 2011 and July
2011, respectively.
Cost of Sales
Cost of sales as a percentage of net sales was 49.8% in 2011, as compared to 49.5% in 2010. Cost of sales
increased by $219.0 million, or 8%, from $2.90 billion in 2010 to $3.12 billion in 2011, as compared to a 7%
increase in net sales. Within cost of sales, product costs increased by $192.5 million, or 8%, from $2.34 billion in
2010 to $2.53 billion in 2011; royalty expenses increased $16.5 million, or 7%, from $245.9 million in 2010 to
$262.4 million in 2011; and freight and logistics expenses increased by $10.0 million, or 3%, from $313.7
million in 2010 to $323.7 million in 2011.
Gross Profit
Gross profit as a percentage of net sales decreased to 50.2% in 2011 from 50.5% in 2010. The decrease in
gross profit as a percentage of net sales was driven primarily by higher product costs, higher royalty expenses as
a result of increased sales of products tied to licensed properties, and unfavorable changes in foreign currency
exchange rates, partially offset by price increases and savings from Mattel’s Operational Excellence 2.0
initiatives.
Advertising and Promotion Expenses
Advertising and promotion expenses increased to 11.2% of net sales in 2011, as compared to 11.1% of net
sales in 2010.
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