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(Reuters) - Mattel Inc (MAT.O) removed Chief Executive Brian Stockton after another disappointing holiday shopping season for the maker of the aging Barbie doll.
The company, which also warned of a fifth straight drop in quarterly sales, has struggled in recent years as young girls shun nearly 56-year old Barbie in favor of electronic toys, tablets and toys based on popular films.
On Monday, Mattel cited a strong dollar as a major factor behind a decline in revenue in the fourth quarter.
The company did not provide a breakdown on sales of Barbie or other products.
Stockton leaves after three years as CEO and two as chairman. Former PepsiCo Inc (PEP.N) executive Christopher Sinclair, 64, was appointed chairman and interim CEO.
Mattel's shares fell as much as 11 percent to a three-year low before recovering to trade down about 4 percent in afternoon trading.
Stockton's abrupt departure follows two years of lower-than-expected holiday sales.
"...The board believes that it is the right time for new leadership," Sinclair, a longtime board member, said in a statement.
Stockton had pinned hopes on doll brands such as Monster High and American Girl to make up for slumping sales of Barbie, but they were never able to match Barbie's popularity.
And another cloud looms: from 2016, Mattel will lose its license to make Disney Princess dolls to Hasbro Inc (HAS.O).
Mattel bought Canadian toymaker Mega Brands for about $460 million last year in an attempt to better compete with Denmark's Lego, which has overtaken the U.S. company as the world's biggest toymaker by sales. The unit has yet to add to profit.
Laying out the company's strategy in October, Stockton said Mattel would invest its core brands and spend more on innovation and building its digital presence, while also reining in costs.
In a preliminary report on Monday, Mattel said net sales fell 6 percent to $1.99 billion in the quarter ended Dec. 31 while net income plunged nearly 60 percent to $149.9 million.
B.Riley & Co analyst Linda Weiser said Mattel risked a year without growth, or even a decline in earnings per share, if it has begun 2015 with too much inventory.
Mattel will likely look outside for a new CEO, although internal candidates such as Richard Dickson and Tim Kilpin, both recently promoted to the role of president, might also be in the running, she said.
Mattel is scheduled to report final results on Friday.
Additional reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Kirti Pandey