(Reuters) - Mattel Inc (MAT.O), the largest U.S. toymaker, reported holiday quarter sales and profit that fell far short of analysts' estimates, hurt by weak demand for its Barbie dolls and Fisher Price toys.
The company's shares were down about 9 percent at $28.67 in after-market trading on Wednesday. Rival Hasbro Inc's (HAS.O) stock was down 4.1 percent at $83.20.
Global sales in the Mattel girls & boys brands business, which includes Barbie and Hot Wheels toys, fell 7 percent in the fourth-quarter ended Dec. 31.
Sales of Barbie dolls fell 2 percent during the quarter after having risen in the past three quarters. Excluding the impact of a strong dollar, sales rose 1 percent.
Mattel's results contradicted an NPD Group report earlier in the day that said the toy industry expanded 5 percent in 2016 as customers took advantage of early Cyber Monday online promotions during Thanksgiving week.
The industry's growth was led by toys based on the Star Wars franchise, whose license is owned by Hasbro.
The toymaker said gross margin for the fourth quarter fell by 3.2 percentage points due to increased promotions during the holiday season and a strong dollar.
"Our results were negatively impacted by a number of industry–wide challenges, including a significant U.S. toy category slowdown in the holiday period," outgoing Chief Executive Christopher Sinclair said in a statement.
The slowdown prompted an increase in promotions that contributed to the slide in gross margins.
Holiday quarter sales accounted for about a third of Mattel's annual sales in 2016.
Sales in Mattel's "other girls" category halved, mainly due to the loss of a Disney Princess contract, which includes Cinderella and Snow White dolls, to rival Hasbro Inc (HAS.O).
Sales in the Fisher-Price and the Wheels category, which includes Hot Wheels, fell 3 percent in the quarter.
Mattel's net income fell to $173.8 million, or 50 cents per share, in the latest quarter, from $215.2 million, or 63 cents per share, a year earlier.
Excluding certain items, the company earned 52 cents per share. Analysts on average were expecting 71 cents per share.
Net revenue fell 8.3 percent to $1.84 billion. Analysts on average had expected $1.96 billion, according to Thomson Reuters I/B/E/S.
(Reporting by Gayathree Ganesan in Bengaluru; Editing by Sriraj Kalluvila)