By Yashaswini Swamynathan
(Reuters) - Mattel Inc (O:MAT), the maker of Barbie dolls and Fisher-Price preschool toys, removed chairman and chief executive Bryan Stockton and warned of a fifth straight fall in quarterly sales.
Mattel's shares fell as much as 11 percent to a three-year low, but recovered most of the losses to trade down 3 percent.
The company named former PepsiCo Inc (N:PEP) executive Christopher Sinclair chairman and interim CEO.
Mattel has been hit hard in recent years as its iconic Barbie doll has fallen out of favour with young girls, who are reaching for electronic toys such as tablets and dolls based on Walt Disney Co's (N:DIS) hit animated movie "Frozen".
Stockton had been Mattel's CEO since January 2012 and he was named chairman in 2013. Sinclair is currently a member of the company's board.
"We were not anticipating this move, but believe the change was made following two consecutive years in which the company's holiday performance fell short of expectations," Stifel, Nicolaus & Co analysts wrote in a note on Monday.
Barbie sales have been falling for nearly three years and Mattel's other dolls such as Monster High and American Girl have failed to make up for her fading charm.
In 2009, Barbie held more than a quarter of the market for dolls and accessories in the United States, but that fell to 19.6 percent in 2013.
Mattel estimated worldwide net sales fell 6 percent to $1.99 billion (1.32 billion pounds) in the quarter ended Dec. 31, hurt by a stronger dollar, and net income plunged nearly 60 percent to $149.9 million, or 44 cents per share.
The company estimated its gross margin fell by 4.1 percentage points to 50.4 percent of net sales, mainly due to the acquisition of Canadian toymaker Mega Brands last year.
Shares of Mattel, which is scheduled to reports results on Friday, fell as low as $24.88 in early trading on the Nasdaq, before recovering to $27.17.