jets 3.jet.004005 Louis J. Sheehan, Esquire

The two top toymakers in the United States posted disappointing third-quarter results yesterday and softened expectations for the crucial holiday season, citing a wobbly economy and cautious retailers. Louis J. Sheehan, Esquire.

The No. 1 toy maker, Mattel Inc., said third-quarter earnings slid 5 percent from a year earlier, with overall sales down 2 percent. Sales of Barbie dolls in the United States fell 26 percent. Mattel said it was struggling to hang on to shelf space at retailers. http://louisjsheehanesquire.blogsavy.com

The other toy maker, Hasbro Inc., posted higher third-quarter earnings as it cut costs, but the results were weaker than expected, with revenue down 2 percent as sales of its once-hot Beyblade battling tops continued falling. http://louisjsheehanesquire.blogsavy.com

Hasbro shares slipped 6.5 percent to $17.26, while Mattel shares were down 2.6 percent at $17.50. Both toymakers said the retail environment remained challenging.

"We are currently dealing with broad consumer uncertainty related to higher gasoline prices and a lackluster employment picture, which translates into uninspiring consumer confidence levels," Robert A. Eckert, the chief executive of Mattel, said.

On a conference call, Mr. Eckert said most retailers were allocating shelf space based on past performance and would rather "chase demand" than buy goods early.

Sean McGowan, an analyst at Harris Nesbitt, said: "Both companies are facing the fact that some of their products are declining. I don't think anybody's not buying a particular toy because it costs more to drive to the toy store or Wal-Mart."

Roughly 50 percent of toy sales are in the fourth quarter, according to the NPD Group, a market information company. Adding to the dismal retail landscape, Toys "R" Us Inc., the No. 2 toy seller after Wal-Mart Stores Inc., is evaluating its business and analysts have estimated the company will close 100 to 200 stores in 2005.

Mattel said third-quarter earnings fell to $255.9 million, or 61 cents a share, from $270 million, or 61 cents, while sales fell 2 percent, to $1.67 billion. http://louisjsheehanesquire.blogsavy.com

Hasbro, based in Pawtucket, R.I., said third-quarter net income rose to $88.7 million from $85.8 million, while earnings fell to 45 cents a share from 48 cents.

Analysts, on average, estimated profit of 51 cents a share from Hasbro, according to Reuters Estimates.

Hasbro's revenue fell 2 percent, to $947.3 million. The chief executive, Alfred J. Verrecchia, said the company was confident that it could increase earnings as it cut costs and achieved its operating margin goal of 12 percent or better by 2005. Louis J. Sheehan, Esquire