Were Barbie's holiday dreams dashed?
Analyst say Barbie didn't deliver the much-needed knockout punch for Mattel in the holiday doll war
NEW YORK (CNNMoney.com) - If Mattel was hoping that Princess Barbie and Fairytopia Barbie -- its two big doll initiatives for 2005 -- would light a fire under sagging Barbie sales over the holidays, the toymaker may be in for another rude awakening. With the exception of the Princess Annika doll, the Barbie Pegasus horse and Cinderella Barbie, toy industry analyst Jim Silver said his own surveys of retail outlets such as Wal-Mart, Target and Toys R Us indicated that holiday sales of other Barbie dolls "were just not up to standard."
Why is this significant? Two reasons. One, toy sales are especially critical in the holiday fourth-quarter, which can account for over 50 percent of toymakers' annual profits and sales. Retailers carefully monitor how particular toys performed during the November-December gift-buying period since they use it as a gauge for planning next year's holiday inventory. So poor sales of a brand could result in fewer orders to toymakers. Second, industry observers estimate that the iconic Barbie brand accounts for almost one-third of the No. 1 toymaker's annual sales of $5.2 billion. But Barbie's worldwide sales are flagging and fell 18 percent last quarter as the company struggles to thwart some stiff competition from a gang of hip, "Bratz" dolls from privately-held MGA Entertainment. "Bratz have become a terrific addition to the girls' toy lines. Bratz have infused energy and excitement, which was lacking in the doll category," said Ernie Speranza, chief marketing officer with KB Toys, a mall-based toy retailer that operates about 650 stores in the United States. The other standout doll of the season also wasn't a Barbie but a $109 interactive doll called "Amazing Amanda" from Playmates Toys which Speranza called a "runaway success" for the retailer. Amazing Amanda speaks, changes her facial expressions and even responds to objects. "We knew that Amazing Amanda was going to be huge this holiday season," said Toys R Us spokeswoman Kathleen Waugh. "Our early read is that sales of the dolls were very strong." Waugh said the retailer did not as yet have an indication of Barbie's sales trends. Bedtime for Barbie?
Mattel (Research) spokeswoman Sara Rosales told CNNMoney.com that Barbie Fairytopia dolls and Barbie Magic of Pegasus character dolls were "both doing well." She declined to comment on the Barbie brand's overall holiday performance, saying that the company typically does not comment on product sales. However, investors will get a gauge of fourth-quarter and annual sales for Barbie when Mattel reports year-end results in January. AG Edwards analyst Tim Conder thinks Barbie's problem goes beyond the challenge from Bratz. "No doubt Bratz have taken significant market share from Barbie in the last three to four years. But I think changing consumer trends could put Bratz in the same situation down the road." According to Conder, the traditional toy business overall is in for turbulent times ahead as kids at an earlier age show a preference for gadgets like cellphones, iPods and videogames. "Boys don't want to play with GI Joe and young girls are moving away from Barbie," he said. Some toymakers have responded to the electronics challenge by attempting to redefine themselves as family entertainment companies rather than just toymakers. Silver gave an example, "The best-selling entertainment product last year with tweens wasn't a toy, it was the iPod," he said. "This year Hasbro took the lead with its innovative I-Dog. That's the type of product that both kids and adults would like to buy." Does that mean Mattel should try to wire-up Barbie by creating an "interactive" doll along the lines of Amazing Amanda or extend the Barbie brand into electronics with a Barbie cellphone or Barbie MP3 player? Said Conder, "I don't think that will help to grow the demographic market for Barbie. A Barbie iPod might not appeal to an older girl because she has the opinion that anything 'Barbie' is what my younger sister plays with." "From everything that we see, dolls will continue to struggle and the Barbie brand will gradually fade to become a smaller piece of Mattel's pie," he said. Chris Byrne, an independent toy analyst, disagrees. Said Byrne, "Mattel's shaken up its management and reorganized its toy units. I think their focus will be on aggressively fixing the problems and adapting faster to the changes in the competitive environment." "Mattel has a history of successfully reinventing Barbie and they've done it at least four times in a major way," he said. "Barbie isn't going to disappear. This is a cyclical business. I don't think Wall Street should put all the burden for Mattel's success on Barbie's plastic shoulders." |
|