BUSINESS

Fewer roles for former it-girl Barbie, creating headaches for Mattel ahead of holiday season

10/16/2014 01:46 EDT | Updated 12/16/2014 05:59 EST
NEW YORK, N.Y. - Mattel's got girl problems and her name is Barbie. Sales of the iconic doll continue to slide and a surprising drop in sales of its American Girl toys could become another headache for the toy company as it heads into the crucial holiday season.

Mattel reported Thursday that Barbie sales fell 21 per cent for the three months ended Sept. 30, even sharper than the 15 per cent drop in the second quarter.

And American Girl's third-quarter sales declined 7 per cent, compared with a 6 per cent rise in the second quarter.

Heightening tensions even more, Mattel's rival Hasbro Inc. recently landed the rights for dolls from the blockbuster Disney movie "Frozen," a coveted relationship for Mattel. The rights for the "Frozen" dolls will go to Hasbro in the spring of 2016.

Dolls are traditionally a tough market to corner. There's a lot of competition and the affections of the target audience — little girls — can be fleeting.

It's not all bad news for Mattel, however. It has recently introduced dolls that have resonated with customers even as Barbie's star appears to fade. Sales of Disney Princess and Ever After High dolls were given most of the credit for the 1 per cent increase in sales of other doll brands in the quarter.

Mattel toys that are geared toward boys are also a bright spot. Sales for the Wheels category, which includes the Hot Wheels and Matchbox brands, climbed 4 per cent.

Mattel Inc., based in El Segundo, California, reported a profit of 97 cents per share on revenue of $2.02 billion for the period Thursday. Its adjusted earnings came to 98 cents. That was short of Wall Street expectations. Analysts had expected per-share earnings of $1.02, and revenue of $2.18 billion, according to a poll by FactSet.

Shares fell 3 per cent to $29.62 in late morning trading. The stock is off about 38 per cent this year.