Mattel Inc. said Friday that its first-quarter earnings dropped nearly 28 percent from a year ago as sales of its Barbie and Hot Wheels brands fell and sales of its Fisher-Price products were essentially flat.

The El Segundo-based toymaker reported first-quarter net income of $6.5 million (2 cents per diluted share), compared with income of $9 million (2 cents) for the like period a year earlier. Net sales for the quarter ended March 31 rose slightly to $783.1 million from $780.9 million in the comparable period of the prior year.

Analysts surveyed by Thomson First Call expected the company to post earnings of 3 cents per share.

First-quarter gross sales dipped 5 percent in the U.S. and were up 6 percent internationally. Operating income for the quarter was down 57 percent to $5.5 million, mainly due to lower gross margin.

Worldwide sales for the Barbie brand were down 15 percent, Hot Wheels declined 5 percent, and sales of the Fisher-Price were $264.4 million, or flat versus the prior year. Worldwide gross sales for the Mattel Brands business unit were $514.4 million, a 3 percent decrease compared with the first quarter of 2004.

Brands managing gains included American Girl, which rose 25 percent, and games and puzzles, which saw global sales advance 18 percent.

"Following last year's encouraging holiday season, our early 2005 results were disappointing," said Robert A. Eckert, chairman and chief executive officer of Mattel, in a press release. "We will be adjusting programs for the balance of the year with the goal of continuing to build market share and improving financial performance."

Mattel's stock settled down 7.7 percent to $18.67 on Friday.

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