Oct 27 (Reuters) - Shares of Mattel Inc were set to open at their lowest since the 2008 financial crisis on Friday after the Barbie maker suspended its dividend and warned it would miss forecasts for revenue this year.
The toymaker was the second in a week to report trouble with existing plans from the bankruptcy of major retailer Toys'R'Us and analysts said Mattel's streak of sales declines could now persist into 2018.
Performance across top brands Barbie, Fisher-Price and Monster High was much worse than most had expected, putting more pressure on management after sales have declined in four of the past six quarters.
"We suspected a rough quarter...but that was really tough," Jefferies analyst Stephanie Wissink said in a note on the results.
New CEO Margo Georgiadis has already embarked on a turnaround plan that has seen the departure of many top-level executives as well as cost cuts.
But the surprise bankruptcy of Toys'R'Us in September added pressure to an industry that has been struggling with online competition and lackluster demand for traditional toys.
Morningstar analyst Jaime Katz said the Toys'R'Us bankruptcy was delaying Mattel's recovery.
"Slower shipments to Toys'R'Us on top of weakening domestic demand for Mattel's products, led to a total sales decline of 13 percent, markedly worse than single-digit gain we forecast," Katz said.
Georgiadis on Thursday said the company would cut $650 million of costs and reinvest $170 million from that in areas such as emerging markets and developing its ability to seamlessly sell in stores as well as online.
Jefferies' Wissink said the ratio of cost cuts to reinvestment looked unrealistic.
"From our observation of MAT and the industry, revival cycles take longer, cost cuts are always narrower, and reinvestment is always larger than initially expected," she said.
Wissink cut her price target on the stock to $12.50 from $14. The median price target on the stock is $18. At least three other brokerages also cut their price targets.
A relatively new top management which lacks experience in toys could also prolong the execution of Mattel's turnaround plan, the analysts said.
"We do not see an easy rescue effort," Wissink said. "Reengaging the sales and profit model will be a grind not impossible, but may not prove as simple as a mega cost cutting exercise."
Mattel's shares were down 19 percent at $12.41 before the bell on Friday. (Reporting by Sruthi Ramakrishnan in Bengaluru; editing by Patrick Graham)