Mattel Inc missed Wall Street's profit and sales estimates for the fourth quarter on weak demand for its mainstay Barbie dolls and movie-themed toys in a holiday season plagued by concerns about the U.S. economy.
Shares of the world's largest toymaker fell 2.3 percent to $36.75 in trading before the market opened on Friday.
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Mattel's news came after rival Hasbro Inc warned its fourth-quarter revenue could fall far short of analysts' estimates. Hasbro blamed weaker-than-expected demand for playthings in what is typically the industry's biggest selling season of the year.
"The retail environment was very difficult in the fourth quarter," said MKM Partners LLC analyst Eric Handler.
U.S. shoppers held back a bit during the 2012 holiday season, spending only 3 percent more than 2011 because of concerns about the economy, the National Retail Federation has said.
Sales of Barbie products fell 10 percent in North America in the fourth quarter, which Handler said was the steepest decline for the brand in several years.
Handler expects Mattel to have a better 2013, citing a strong product lineup and a slowly recovering global economy.
Despite the sales miss, Mattel still appears to have gained market share from smaller rivals such as Hasbro in the United States and nearly a half-dozen European markets, analysts said.
Hasbro's lack of entertainment-themed toys could hurt its prospects in the near term, said Handler, who rates Mattel shares as "buy" and Hasbro as "neutral."
It will be another two years before the release of another "Transformers" movie, which is based on a Hasbro brand, Handler said.
Hasbro plans to report its fourth-quarter results on February 7.
WEAK SALES GROWTH
Mattel, also home to Hot Wheels cars and Fisher-Price toys, said its net income had fallen to $306.5 million, or 87 cents a share, from $370.6 million, or $1.07 a share, a year earlier.
Excluding a litigation charge, the company earned $1.12 a share, missing the analysts' average estimate of $1.15, according to Thomson Reuters I/B/E/S.
Net sales rose 5 percent to $2.26 billion, and fell short of the analysts' average estimate of $2.29 billion.
Global sales of Barbie products fell 4 percent. Sales at Mattel's entertainment business, which includes electronic games, were down 13 percent, mainly on weak demand for "Cars 2" movie-themed toys.
Also on Friday, Mattel announced a first-quarter cash dividend of 36 cents a share. That reflects an annualized payout of $1.44 a share, which would be up 16 percent from last year.
(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn)