- The Washington Times - Tuesday, February 3, 2009

NEW YORK | As toy maker Mattel Inc. reported that its profit fell almost by half for the key fourth quarter and more than one-third for the year, it said Monday that it will raise its prices and cut its 2009 spending, including on advertising.

Analysts had expected Mattel to report weak results for the quarter that included the worst holiday season in decades. But the company’s profit and sales fell further than most predicted.

Toys tend to resist economic strain better than many products because parents tend to keep spending on their children, even when they spend less on themselves and on household goods.

But Mattel had no such buffer as its fiscal 2008 came to a close.

The company said quarterly profit fell to $176.4 million, or 49 cents per share, from $328.5 million, or 89 cents per share, a year earlier.

Revenue fell 11 percent to $1.94 billion from $2.19 billion, including a 6 percent decline in the U.S. and a 20 percent drop internationally.

Chairman and CEO Robert A. Eckert said in a call Monday with investors that lackluster sales, lower gross margins and higher expenses led the company to miss analysts and its own estimates for the quarter and all of fiscal 2008.

Sales declined across most of Mattel’s top brands, including a 21 percent drop at Barbie, a 22 percent drop at Hot Wheels and a 9 percent drop at Fisher-Price. One bright spot in the quarter, which ended Dec. 31, was American Girl dolls, which saw sales rise 5 percent to $254 million.

“While we expected any surprises to be negative, the breadth of the weakness is worse than we anticipated,” said Needham & Co. analyst Sean McGowan.

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