Barbie nose-dives as Mattel's problems mount

A life-sized Barbie Dream House due to open as a tourist attraction in Berlin next month. Photo / AP

Barbie may still have Ken and her Dream House, but she's struggling to hang on to the thing she needs most: her fan base.

Toymaker Mattel reported on Thursday that the Barbie brand had a staggering 21 per cent decline in sales during the third quarter, compared with the period last year. The slide came on the heels of two rough quarters in which Barbie sales decreased by at least 14 per cent in each.

Barbie is still one of the top doll brands in the world, but girls are increasingly enticed by other characters and games that work on a tablet or smartphone.

In a conference call on Thursday morning, Mattel executives told investors that the company was working to get Barbie back on track.

"We've invested in the doll. The dolls look better than last year," said Bryan Stockton, Mattel's chief executive. "We have more activities going on in terms of the accessory part of the business."

For all of its toy brands, including Barbie, Mattel is focusing its marketing and advertising muscle on the crucial fourth quarter, a strategy the company hopes will pull in more dollars from holiday shoppers.

The weakness in the Barbie brand was partially offset by strong sales in Mattel's line of Disney toys, especially those tied to the blockbuster movie Frozen.

But the popularity of these toys is not going to be a tail wind for Mattel much longer. Disney will take the license for its Disney Princess and Frozen toys to Hasbro in 2016, which means that Mattel is going to be looking for ways to fill a massive revenue hole.

Mattel also reported that sales of its American Girl brand dolls and accessories slipped 7 per cent in the quarter. The company said the number looks relatively worse because last year's third quarter was unusually strong, with shoppers rushing to buy the beloved Molly doll before the brand retired it.

This year, Mattel surrendered its longtime standing as the world's largest toymaker to Lego, whose sales rocketed amid the success of The Lego Movie.

Although Mattel will be wounded by the loss of some of its Disney licenses, the toymaker has plenty of other licenses for screen characters that its hopes will boost sales. In the fourth quarter, its Hot Wheels brand will release a line of Star Wars cars. Mattel also has partnerships with Warner Bros, which this week announced plans for 10 films based on such DC Comics characters as Wonder Woman.