Mattel's "Hello Kitty Barbie" is due to hit the world market in September.
Mattel's "Hello Kitty Barbie" is due to hit the world market in September. - 
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KAI RYSSDAL: Despite some recent struggles, Mattel has proven that playing with dolls can indeed turn a profit. The biggest U.S. toymaker announced results today. Sales rose about 7 percent, pretty much in line with what analysts were expecting. But Marketplace's Jeff Tyler reports the success is coming from a place you might not expect.

Jeff Tyler: Business has been better for Mattel outside the country than here at home. Sales for Barbie in the U.S. are down about 5 percent.

Eric Kolb: Worldwide growth sales for Barbie were up 6 percent.

That's Eric Kolb, equity analyst at Standard & Poors. He says strong global sales and a favorable currency exchange rate have compensated for weak U.S. sales.

Kolb: Domestic sales were down 3 percent. But that was more than offset by an 18 percent increase in international markets.

Those international sales are expected to remain strong in the months ahead. Sean McGowan with Wedbush Morgan Securities anticipates a good year for Mattel. But he cautions that, here in the U.S., Barbie is finally facing some stiff competition.

Sean McGowan: Its principal competitor now is a company called MGA that makes Bratz. Bratz is, in some countries, actually bigger than Barbie. In this country, it's not yet. But it's the most serious competitive threat that Barbie has faced in its almost 50-year life.

There's also new competition from inside the Mattel family. Later this summer, the company is rolling out new characters for its high-end line of dolls, sold under the American Girls brand.

Overall, analysts expect the entire industry will do well as it heads into the second half and the crucial holiday season.

The biggest winner is expected to be Mattel's main competitor. Analysts say Hasbro is on track for a banner year, as it capitalizes on toys tied to summer blockbusters "Spiderman" and the "Transformers."

I'm Jeff Tyler for Marketplace.

Follow Jeff Tyler at @JeffMarketplace