Poor sales knock Mattel's profit

Sales of Mattel's key Barbie brand were down 21%

Toymaker Mattel has reported a 46% fall in quarterly profits, after it was hit by weak Christmas sales and the strengthened value of the dollar.

The US group, best known for its Barbie doll, made a net profit of $176m (�124m) in the last three months of 2008, down from $328m a year earlier.

Mattel's profit decline was much more severe than market expectations, and its shares fell 17.5%.

Its quarterly sales were 11% lower, again from a year before, to $1.9bn.

While its domestic sales were down by 6%, those overseas were 20% lower.

Overall sales of Mattel's core Barbie brand, which celebrates its 50th anniversary in March, were 21% lower.

Stock build-up

"Our business wasn't immune from the deteriorating economic environment of 2008," said Mattel chief executive Robert Ecker.

Mattel said its focus for 2009 would now be on reducing both costs and spending.

Analyst Gerrick Johnson, of BMO Capital Markets, said he was most concerned by the fact that Mattel's inventories - its levels of unsold stock - had risen by 13%.

"That means things deteriorated much more quickly than they had planned," he said.

Last year, Mattel secured a legal victory to stop MGA Entertainment selling Bratz dolls, a rival to Barbie.

It successfully argued that Bratz designer Carter Bryant had developed the brand when he previously worked for Mattel.

However, a judge ruled earlier this year that Bratz dolls could remain on sale during 2009.

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