UPDATE: Mattel's Fourth-Quarter Profit Falls 46% As Barbie Turns 50

By Matt Andrejczak

SAN FRANCISCO (Dow Jones) -- Mattel Inc. reported Monday that fourth-quarter profit fell 46%, citing the ongoing economic slump, and shares tumbled nearly 17% in premarket trading.

The El Segundo, Calif.-based toy maker reported quarterly net income of $176.4 million, or 49 cents a share. In the year-ago period, when its profit was hit by product recall charges, the toy maker earned $328.5 million, or 89 cents a share.

Sales fell 11% to $1.94 billion. Foreign-currency translations knocked 5 percentage points off sales, Mattel (MAT) reported.

"Our business wasn't immune from the deteriorating economic environment of 2008," said Robert Eckert, Mattel's chairman and chief executive officer. "In response, our focus for 2009 is on cost and spending reductions, and maintaining a strong balance sheet."

Worldwide gross sales for the Barbie brand declined 21% in the quarter.

Analysts had expected Barbie to rebound.

The doll, which turns 50 this year, has had trouble dealing with the pouty-lipped Bratz dolls and other forms of play for young girls. Mattel late last year won a favorable ruling in its lawsuit against the maker of Bratz, and retailers have been heavily discounting the dolls.

Sales for the Wheels category, which includes the Hot Wheels, Matchbox and Tyco R/C brands, fell 19%.

Fisher-Price sales declined 10% to $754.2 million.

While the toy industry has proved to be more resilient in economic downturns, 2008 was tough on all consumer product makers. Analysts are forecasting U.S. toy industry sales fell 5% to 6% last year. A final figure is expected to be released at Toy Fair in mid-February.

Mattel does not issue public profit targets. Rival Hasbro Inc. (HAS) reports earnings Feb. 9.

There is concern about first-quarter sales for toy makers. Retailers may order fewer toys because of current inventory levels. This is in spite of cautious order patterns last fall.

Shares of Mattel closed Friday at $14.19. The stock is down 25% over the past 12 months.

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