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Mattel cuts sales target for Shanghai Barbie store

(China Daily/Agencies)
Updated: 2009-11-20 08:08

"The initial sales targets were astronomical," said Dann Murphy, who took over as general manager as his predecessor left eight months after the store opened. Targets for the six-story outlet's restaurant and "retail experience", which includes designing personalized Barbie dolls, have been revised down three times since its opening in March.

Mattel chose Shanghai for its first dedicated Barbie store as consumer demand slumped in the United States and Europe.

China's economic growth accelerated to 8.9 percent from a year earlier in the third quarter, while the US economy expanded 3.5 percent from the previous three months. Compared with the previous year, US GDP shrank 2.3 percent in the third quarter.

"Every retail store operates at a loss when it opens, but they've been open long enough that it should be working by now," said Paul French, founder of Shanghai-based market research company Access Asia.

"They overestimated their brand recognition in China. I just think the concept is wrong."

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Mattel has revised the overall sales target for the store to between 65 percent and 70 percent of original expectations, said Murphy. The store has started meeting its sales targets on product sales, including dolls and toys, after the targets were downgraded twice, he said.

"The restaurant hasn't carved out its own separate identity," said Murphy in a Nov 16 interview in Shanghai. "Sometimes customers don't even know the restaurant is there. So they get to the sixth floor and are like, 'Where am I?'"

Mattel fell 12 cents to $20.55 on Wednesday in NASDAQ Stock Market trading. The shares have gained 28 percent this year.

The company modeled the store's concept on American Girl, Mattel's online doll catalog that also has retail stores and restaurants in the US.

Mattel intended for the store to generate revenue from its retail sales, spa, restaurant and what it calls its "retail experience", which includes having children pretend to model clothes on a fashion runway and to design customized Barbie dolls.

China's retail sales growth last month was the fastest since December, excluding seasonal distortions in January and February.

Mattel's third-quarter profit fell 3.5 percent to $229.8 million as consumers spent less on toys and Barbie faced challenges from new dolls.

More than 500,000 people visited the store between the March 6 opening and Oct 9, former general manager Laura Lai said last month.

Lai, 41, was replaced by Mattel "retail specialist" Murphy, the California-based toymaker said in an emailed statement on Nov 6. It didn't say why or when Lai resigned. Lai said she stopped working for the store on Oct 22.