What happened

Shares of Mattel (NASDAQ:MAT) were falling today after the toy maker reacted poorly to news from Target (NYSE:TGT) that toy sales were sluggish during the holiday season. The holiday season is crucial for toy makers, especially Mattel, which is in the midst of a multiyear restructuring process. Shares of the Barbie maker were down 5.9% as of 11:47 a.m. EST on the news.

So what

Target said that its own comparable sales in toys were flat, though it still gained market share according to the NPD Group.  In other words, toy sales seem to have fallen during the holidays, likely due to the shortened shopping season.

A Barbie doll with a tree and a desk

Image source: Mattel.

A number of related stocks, including Best BuyWalmart, and Hasbro, also fell, but no one took the news harder than Mattel, which finds itself in the most precarious position of the bunch.

The company, which also owns brands like Hot Wheels and Fisher-Price, has been struggling for years as kids have begun favoring screens over classic toys, and it's faced challenges from tariffs and new competition. Last year, the company also found accounting errors that led to the exit of its CFO, one example of how Mattel has at times created its own problems.

In its fourth-quarter guidance, the company said sales would be down slightly due to a shorter holiday season, among other issues. 

Now what

We'll learn more when Mattel reports fourth-quarter earnings, which is expected at the beginning of February. Analysts are predicting that revenue will have declined 1.8% to $1.5 billion and that earnings per share will be $0.01, down from $0.04 the year before. 

Mattel shares have long been volatile due to the company's struggles and its heavy debt burden, though its intellectual property seems to have put a floor on the stock. Given questions about the holiday quarter in the toy industry, that volatility will likely continue over coming weeks.