Mattel Inc.'s (MAT) stock tumbled Friday as the nation's largest toy maker by revenue sparked fears about holiday sales amid slumping sales at its Fisher-Price division.

Merchandise tied to the animated blockbuster movie "Toy Story 3" and toys based on World Wrestling Entertainment Inc. (WWE) were strong, and profits were helped by foreign tax credits and cost cuts. But third-quarter sales at its Fisher-Price division dropped 5% compared with the same period last year. Last year, third-quarter sales at Fisher-Price dropped 6% from the third quarter of 2008.

Mattel spoke little about the effects of the quarter-ending recall of more than 11 million Fisher-Price products that have the potential to injure children, which Mattel said in September would hurt earnings slightly.

On a conference call to discuss results, Mattel executives said it's too soon to tell how the holiday season will treat Fisher-Price and noted that the recall interrupted the company's marketing plans and Fisher-Price toys tend to have higher prices compared with other toys. Mattel said the recall has cost it less than $8 million so far and management didn't expect large additional expenditures to deal with the situation.

Mattel saw its sales hit by unfavorable currency-exchange rates, and management singled out Venezuela as a drag. It also warned that it would have trouble meeting holiday demand for "Monster High" products and a dancing Mickey Mouse doll.

A Mattel spokeswoman wasn't immediately available for comment.

Shares of Mattel rebounded slightly from pre-market lows, as Mattel on its call told Wall Street that it expects to gain market share both in the U.S. and abroad over the holidays, but it cautioned that Christmas sales will occur later than usual this year as price-conscious consumers wait a little on purchases as they did during the recent back-to-school season.

Mattel's costs for materials, labor and shipping will continue to rise, which Mattel said will likely result in higher toy prices at stores next year compared with this year. Sales of Mattel's iconic Barbie increased 6% as the line continues rebound efforts, but revenue from Hot Wheels cars dropped 3%.

Overall, Mattel's gross margin narrowed slightly, but lower costs, less interest expense and a lower provision for income taxes caused its net margin to jump.

Shares were down 7.8% at $22.14 in recent Friday morning trading. The stock had been up over 20% so far this year. Rival Hasbro Inc. (HAS) saw its stock fall 3% to $44.58 early Friday.

-By Maxwell Murphy, Dow Jones Newswires; 212-416-2171; maxwell.murphy@dowjones.com

(Jodi Xu contributed to this article.)
Mattel (NASDAQ:MAT)
Gráfico Histórico do Ativo
De Jun 2024 até Jul 2024 Click aqui para mais gráficos Mattel.
Mattel (NASDAQ:MAT)
Gráfico Histórico do Ativo
De Jul 2023 até Jul 2024 Click aqui para mais gráficos Mattel.