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Barbie’s star power continues to fade

Hot Stock Minute

It looks like Barbie needs more than just a makeover as the 55-year-old brand struggles to keep up in the digital age.

Mattel (MAT), the world’s largest toymaker, reported Barbie sales fell 15% compared to the same quarter a year ago. Sales of the iconic brand have fallen eight of the last ten quarters. However, the trouble in toyland is not only limited to Barbie. Sales at Mattel’s Fisher-Price brands fell 17%, while Hot Wheels fell 2%. It’s too dependent on Barbie and Fisher-Price said Yahoo Finance Senior Columnist Michael Santoli.

Mattel has been experiencing a decline in sales for the past two years with traditional toys facing more competition from digital entertainment, such as videogames and smartphones. Santoli said those secular pressures on toymakers have become too much. “ I don’t really know if there’s anything magic Mattel could do to kind of get out of this bind, but I do think the pressure is going to be there for a little while,” he said.

Mattel said earnings were also hurt by costs related to its purchase of Canadian company Mega Brands. The toymaker acquired the maker of Mega Bloks to compete with Lego in the building block market, which is doing well. Sales of American Girl dolls remained a bright spot for the toymaker, as sales rose 6%.

In a statement, Mattel CEO Bryan Stockton expressed disappointment with second-quarter results, and explained what Mattel is doing to position iteslf ahead of the all-important holiday season. “As we move into the second half of the year and the all-important holiday season, we need to drive POS higher by bringing innovative products to market, making additional advertising investments and optimizing the effectiveness of our marketing spend.”