Mattel Inc., the world’s largest toymaker, posted profit that trailed analysts’ estimates as sales of Barbie dolls dropped for a fourth straight quarter.
Third-quarter net income shrank 22 percent to $331.8 million, or 97 cents a share, from $422.8 million, or $1.21, the El Segundo, California-based company said today in a statement. Analysts had predicted $1.02 a share, on average, based on 12 estimates compiled by Bloomberg.
Mattel is grappling with sluggish toy sales as kids spend more time playing on electronic devices. Total revenue also fell for a fourth straight period, with worldwide sales of Barbie dropping 21 percent and Fisher-Price toys falling 16 percent. Sales of American Girl dolls decreased 7 percent. In another blow to Mattel’s doll line, the company is losing its license for Walt Disney Co.’s Frozen dolls to Hasbro Inc. in 2016.
“What’s been really worrisome is that it’s been multiple consecutive quarters where things have fallen short,” said Jaime Katz, an analyst at Morningstar Inc. in Chicago. “You certainly wonder who is taking share and how is Mattel not connecting with consumers?”
The stock dropped 3 percent to $29.62 at the close in New York. The shares have declined 38 percent this year, compared with an 0.8 percent advance for the Standard & Poor’s 500 Index.
Total revenue declined 8.6 percent to $2.02 billion in the quarter. Analysts had forecast $2.17 billion.
Barbie revenue has declined more than 10 percent in each of the last four quarters. Still the brand, Mattel’s largest, is showing signs of improvement, Chief Executive Officer Bryan Stockton said.
“Barbie is not out of the woods yet, but we continue to make solid progress,” Stockton said on a conference call with analysts. “Barbie’s going to continue to be a brand that we spend a lot of time and attention on.”
The company’s profitability also continued to deteriorate. Gross margin, or the percentage of sales remaining after costs of goods sold, narrowed to 50.5 percent from 53.8 percent. That marked a third straight quarterly decline.