To Thine Own Self Be True, Barbie
By Telis Demos

(FORTUNE Magazine) – We've heard plenty about the pain of high fuel prices. But have you considered how they might hurt Barbie? In October, when explaining why Mattel missed yet another earnings target, CEO Robert Eckert bemoaned the tough retail environment and pointed to oil-related cost increases, adding, "Retailers I've talked to are anxious with higher gasoline and heating oil prices."

It's fair to worry that moms and dads are having trouble gassing up the minivan to get to the store. But each quarter Eckert seems to come up with a new extenuating circumstance to explain his profit problems. The previous quarter's earnings drop was partially explained by "repatriation expenses." The earnings miss the quarter before was because of a one-time charge from a failed toy called JuiceBox. None of that would really matter if it weren't for Mattel's underlying trouble: Barbie herself. The blond bombshell makes up a quarter of the company's sales, yet has seen revenue drop for eight straight quarters. Sales of Mattel's other brands, like Fisher Price, have improved, but not enough to make up for Barbie's slippage.

Mattel knows this. "Revitalizing the Barbie brand continues to be a key priority," a spokesperson says, "as well as addressing cost pressures." Barbie would consider a second mortgage on the Dream House to help, but the housing bubble makes her nervous.