Mattel sales hit by 'toxic toy' recalls

Sales of Barbie dolls and Fisher-Price products have been hit hard as their manufacturer Mattel struggles to dispel its reputation as the "toxic toymaker", it was revealed yesterday.

In its quarterly earnings report, Mattel recorded a $40m charge to cover the cost of recalling 21 million toys made in China, many of which were feared to contain lead paint and other dangers. But it was the underlying performance of the business that alarmed Wall Street, as Mattel's public relations nightmare was clearly hampering sales even of unaffected toys.

Barbie, already losing a vicious catfight with her rival Bratz dolls, suffered a 19 per cent fall in sales in the US in the three months ended 30 September. Her global sales were down 4 per cent.

Margaret Whitfield, an analyst at Sterne Agee, told clients that the recalls had dented customer confidence in Barbie and in Fisher-Price educational toys. "The key Barbie products for the back half do not seem to be performing well at this early stage," Ms Whitfield wrote in a research note.

The company said third-quarter profit fell to $236.8m from $239.0m a year earlier, on sales up 3 per cent to $1.84bn. Both figures were below Wall Street expectations. Chief executive Robert Eckert said Mattel was working through its problems with Chinese manufacturers.