The lower than expected results come as companies face a range of higher costs including increases in resin prices, higher wages and a stronger currency in China and higher product-testing costs.

The company’s profit rose slightly by one per cent to $238.1 million, or 66 cents per share, up from $236.8 million, or 61 cents per share, in 2007. The Thomson Financial consensus analyst forecast for the period was 71 cents per share.

Sales rose six per cent to $1.95 billion from $1.8 billion, missing analysts’ expectations of $1.96 billion. The benefit of a weaker dollar helped results by two percentage points.

Shares fell by two per cent, or 29 cents, to $14.16, meaning that in total, the company has tumbled 27per cent so far this year.

Barbie sales fell by one per cent, but Fisher-Price brand sales rose four per cent and American Girl sales rose by a healthy 11 per cent, boosted by the Kit Kittredge film.

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Expenses for advertising, promotions and other selling and administrative expenses all rose during Q3.

Bob Eckert, Mattel's chairman and chief executive, said: “There will be a Christmas and Mattel toys will be under the tree. That said, I appreciate that some families may have to make choices this year when it comes to buying toys for their children.”