July 21 Reuters Parents continued to buy Mattel Inc39;s action figures and Hot Wheels cars for their kids even though the toys got pricier, helping the company trump quarterly results estimates on Thursday.

Rival Hasbro Inc had also notched a robust second quarter, as demand for toys has so far withstood the decadeshigh inflation that has forced Americans to save their dollars for essentials like food and gas.

But surging costs of raw materials, freight and labor are starting to catch up to Mattel, pulling its adjusted margins to 45 from last year39;s 47.5.

In response, Mattel plans to continue raising prices and Chief Executive Officer Ynon Kreiz said he was confident that toy sales would hold up even in a potential economic downturn, echoing comments from his counterpart at Hasbro.

Mattel39;s net sales jumped 20 to 1.24 billion in the second quarter, surpassing analysts39; estimates of 1.10 billion, according to Refinitiv IBES data.

The overall gross billings for Hot Wheels toys rose 26 in the quarter, while the unit that makes action figures recorded a 44 jump, driven by demand for toys based on characters from the Lightyear and Jurassic World movies.

However, Chief Finance Officer Anthony DiSilvestro in an earnings call said the company is seeing some softness in higherpriced items such as the Barbie Dreamhouse.

Shares of the Californiabased toymaker slipped about 1 in extended trade, bruising this week39;s 12 gain.

We believe peak margins are behind MAT and…