Mattel's lower earnings imply this holiday season won't be child's play

It's getting ugly in the toy aisle this holiday season -- and it could stay ugly into next year. Mattel Corp. (MAT) just reported its third-quarter sales, and profits were down. The company blamed the lack of popular movie-based toys, tight inventory management among retailers, and the weak economy.

Mattel's earnings were $229.8 million, down 3.5 percent below the same period last year, and net sales were down 8 percent to $1.79 billion. That matched analysts' expectations to the penny, thanks to cost-cutting, since Mattel reported sales of some of its most popular toys were down. Sales in the girls and boys toys division were down 10 percent, led by an 8 percent drop in sales of Barbie toys. Sales of toy cars such as Tyco and Hot Wheels were down 3 percent and the Fisher-Price brand of preschool toys sold 6 percent less than last year.