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EL SEGUNDO - Toy maker Mattel Inc. said third-quarter earnings rose 3%, before one-time items, as sluggish domestic US sales were only partially offset by overseas sales.
 
Worldwide net sales rose 2% to $1.7 billion. But sales fell 4% in the US, the company said, adding that worldwide gross sales for Barbie were up 8%, Hot Wheels sales were flat, core Fisher-Price sales slipped 1%, and American Girl brands were down 2%.
 
Before one-time items in both periods, the world's No. 1 toy maker reported income of $265.2 million, or 60 cents per share, compared with $256.7 million, or 58 cents a share, a year earlier.
 
On a recent conference call with Reuters News Service, Mattel Chief Executive Robert Eckert blamed the "challenging" US retail environment for slipping domestic sales, and said that while there was positive sales momentum during the back-to-school shopping window, key customers have continued to focus on cutting inventories.
 
Analysts on the call pointed out, however, that two of Mattel's largest customers, - Wal-Mart and Target Corp. - have both reported strong weekly toy sales.
 
Eckert said the company does not comment on an individual customer's performance.

Mattel has been losing share in the doll and trading card categories, Eckert said. Earlier this year it launched a line of hip-hop fashion dolls called "Flavas" in a move to appeal to girls who have outgrown Barbie.
 
"The brand is only a couple months old," he said. "It's too early to see how it will play out, but it hasn't set the world on fire."
 
Flavas, Eckert said, supplements last year's Barbie spin-off My Scene, also a more grown-up version of Barbie. Sales of the My Scene line and Swan Lake Barbie are "doing nicely."

Both dolls are part of a move to compete with MGA Entertainment's popular Bratz doll, which analysts say is stealing market share in the fashion doll segment.
 
With overall US sales of toys flat last year, Mattel sees international expansion as key to the company's growth.
 
"International growth will be a primary driver of Mattel's top line, like any other consumer products company," Linda Bolton Weiser, an analyst with Oppenheimer, told Reuters.
 
The company recently ended its Japanese distribution deal with Bandai and is in the process of opening a fully operating subsidiary in Japan.
 
"Japan is a very significant toy market which is virtually untapped by Mattel," Eckert said. "We see a good opportunity to leverage our strengths and expand our presence [in Japan]."

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