DOW JONES NEWSWIRES
Mattel Inc.'s (MAT) fourth-quarter net income fell 46% amid a
prior-year gain, falling margins and a slump in international
sales.
"Our business wasn't immune from the deteriorating economic
environment of 2008," Chief Executive Robert A. Eckert said. "In
response, our focus for 2009 is on cost and spending reductions and
maintaining a strong balance sheet."
In November, Mattel cut 1,000 jobs worldwide, or about 3% of its
work force.
The nation's largest toy maker posted on Monday net income of
$176.4 million, or 49 cents a share, down from $328.5 million, or
89 cents a share, a year earlier, which included a net 13-cent tax
benefit.
Revenue decreased 11% to $1.94 billion, with nearly half the
drop due to the stronger dollar.
Analysts polled by Thomson Reuters expected earnings of 76 cents
on revenue of $2.21 billion.
Gross margins fell to 46% from 48%. Many toy retailers had been
cutting prices before Christmas in an effort to boost sales amid a
challenging holiday season. International sales dropped 20%, while
sales in the slumping North American market fell 6%.
Fisher-Price sales fell 10% while Barbie, Mattel's flagship
franchise, slumped 21% after a 1% drop in the third quarter. Mattel
is working on revamping Barbie for her 50th anniversary this year
to try to make the doll fashionable again with older girls, who are
dropping her for other, edgier playthings like video games. Sales
of Barbie products account for about one-fifth of the company's
overall sales.
Sales for the Wheels category - which includes the Hot Wheels,
Matchbox and Tyco R/C brands - declined 19%, while the
entertainment business, which includes games and puzzles, fell
17%.
American Girl Brands, Mattel's expanding high-end doll unit, saw
sales rise 5%.
One potential threat to its doll franchises could be eased
through its court victory over MGA Entertainment related to the
Bratz dolls that MGA sells but were created by a former Mattel
employee while still on the payroll there. Mattel lost one round in
the legal fight last month when a federal judge ruled MGA could
sell Bratz dolls through 2009 before turning the franchise over to
Mattel. The ruling stayed a previous decision that would have
forced MGA to give up control as soon as this month.
Mattel's shares closed Friday at $14.19 and haven't traded
premarket.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com
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