So Many Toys, So Little Joy


LEAPFROG FLOPS. Boosting profits remains an elusive game. Mattel, maker of Barbie, Hot Wheels, and Fisher-Price brands, posted third-quarter sales that were essentially flat, while profit margins slipped. Gross margin was 49.3% in the third quarter, a decline of 1.1 percentage points from a year ago. Much of the drop was due to higher costs for raw materials used to make and package toys.

Even LeapFrog Enterprises (LF ) the rising star of toy manufacturing, now ranked No. 3 with an expected $679 million in sales, according to Piper Jaffray, is under pressure. On Oct. 22 it announced a 25% increase in net profits in the third quarter, to $33.4 million on sales of $20


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