For the quarter, it reported net income of $331.8 million, or 97 cents per share, compared to last year's $422.8 million, or $1.21 per share.
Net sales fell 8 percent to $2.02 billion from $2.21 billion, as North American sales and international revenue both decreased 7 percent.
Wall Street analysts expected the toy maker to deliver earnings of $1.02 per share and $2.18 billion in sales based on data compiled by Fact Set.
Its Mattel Girls and Boys Brands unit, which includes Barbie, saw sales declined 11 percent from the same period last year to $1.32 billion. Barbie brand sales worldwide tumbled 21 percent while its Wheels brand sales, which includes the Hot Wheels and Matchbox brands, rose 4 percent. Entertainment business sales slid 23 percent.
Its Fisher-Price unit sales decreased 16 percent to $663.4 million, and its American Girl Brands division, which sells the products directly to consumers, recorded revenue of $113.3 million, down 7 percent from the year ago period.
Sales from its construction and arts & crafts brands, which includes the MEGA BlOKS brand, were $123.4 million. Mattel acquired MEGA Brands in April of this year.
“While third quarter results did not meet our expectations, they do reflect progress towards achieving our goal to end the year with improved POS momentum and reduced inventory levels,” said chairman and chief executive Bryan G. Stockton.
“Global POS was positive in the quarter, and inventories at retail, both in the U.S. and in international markets, were lower.
"Clearly we have work to do as we enter the fourth quarter, and we remain focused on executing during the all-important holiday season and beyond.”
Mattel said its gross margin declined 330 basis points of net sales partly due to the acquisition of MEGA Brands.
Shares were down 3.4 percent late Thursday at US$29.49 on the Nasdaq.