By Shailaja Sharma
(Reuters) - Mattel Inc (O:MAT) needs to move with a "sense of urgency" to create toys that connect with young customers, its interim CEO said, as dolls based on Disney's blockbuster film "Frozen" stole the show from its Barbie dolls in the holiday quarter.
The company, which also makes Fisher-Price preschool toys and Monster High and American Girl dolls, reported its fifth straight fall in worldwide quarterly sales on Friday.
Mattel's shares were unchanged in noon trading, recovering from a 2.6 percent drop earlier.
Worldwide sales of Barbie fell 12 percent in the fourth quarter, while those of Fisher-Price toys declined 11 percent.
Christopher Sinclair, who took Mattel's reins after it removed Bryan Stockton as CEO on Monday, said the company's brand propositions were not compelling enough, mainly for Barbie and Fisher-Price.
Mattel spent 40 percent more on advertising in the quarter, but that did not translate into sales, Sinclair said.
Industry-wide toy sales in the United States rose 4 percent in 2014, according to consumer research firm NPD Group.
In the period, Mattel's sales fell 7 percent, highlighting the company's failure to innovate faster than smaller rivals Jakks Pacific Inc (O:JAKK) and Hasbro Inc (O:HAS).
Jakks makes dolls based on "Frozen", such as Snow Glow Elsa and Anna Ice Skating doll. Hasbro's products include My Little Pony toys and "Hunger Games" inspired Nerf Rebelle bow and arrow toys.
Mattel's sales fell in six of the 12 quarters that Stockton was CEO. He took the top job in 2012.
Barbie sales have been falling for the past two years as young girls increasingly favor electronic toys, tablets and toys based on popular films.
Denmark's privately held Lego Group dethroned Mattel as the world's largest toymaker by sales in the first half of 2014, helped by the success of its toys based on "The Lego Movie". Lego is yet to report full-year sales.
Most of Mattel's revenue comes from brands that are at least three decades old. Fisher-Price was launched in 1930, Barbie in 1959 and American Girl in 1986.
The company's net income plunged nearly 60 percent to $149.9 million, or 44 cents per share, in the fourth quarter.
Excluding items, Mattel earned 52 cents per share, lower than the average analyst estimate of 92 cents, according to Thomson Reuters I/B/E/S.
Worldwide sales fell about 6 percent to $1.99 billion.
Mattel's shares were at $27 in noon trading on the Nasdaq.