MGA sees higher international sales: CEO

By Aarthi Sivaraman

NEW YORK (Reuters) - MGA Entertainment, known for its Bratz dolls, sees international sales contributing 50 percent to its business in three to four years as markets like Europe and Latin America grow, its chief executive said on Monday.

Isaac Larian, CEO of the family-owned company, told the Reuters Consumer and Retail Summit on a conference call that online sales to consumers, like those of its Little Tikes toys, would make up 8 percent to 10 percent of total revenue in two to three years, as shoppers choose buying online over driving to stores as fuel prices skyrocket.

Online sales account for "right now less than 2, 3 percent" of sales, Larian said.

Larian also said he expects the toy industry's holiday sales to be flat to down 2 percent to 3 percent, but down 8 percent to 10 percent "if you put inflation into that," which he said would be in line with MGA's outlook for itself.

"We are trying to be very, very conservative. We do not want to be stuck with inventory," Larian said.

The company is raising prices on a case by case basis, by about 5 percent to retailers, which they would pass down to consumers, Larian said.

HOLIDAY PLANS, MANUFACTURING

"We, as well as I believe everybody else in the toy industry, is planning our business down because of the recession and what's happening there," Larian said of the holidays.

To compensate, he said, it was expanding distribution to specialty stores and stores such as RadioShack (RSH.N: Quote, Profile, Research, Stock Buzz).

Larian's outlook comes as the retail industry braces itself for lackluster holiday sales this year, as consumers battling gas prices over $4 a gallon, high food prices, a weak housing market and tighter credit conditions, rein in their spending.

This holiday season, shoppers would likely gravitate toward toys at lower prices, below $30 or $35, Larian said.

"My general feeling is that people would buy lower-priced toys this year compared to higher prices. They will not indulge."

MGA manufactures about 70 percent of its toys in China and the rest in the United States and Poland, Larian said.

The cost of manufacturing in China, however, has risen recently, as energy, labor and raw material costs have increased, and its currency has appreciated.

It would be time to seriously consider moving back a lot of manufacturing to the United States, Larian said, if oil prices get close to $200 a barrel.  Continued...