The recession is taking its toll on the toy industry and its largest toyco El Segundo, California-based Mattel.

The toy titan reported a US$51 million net loss, compared to the Q1 2008 net loss of US$46.6 million, though chairman and CEO Robert Eckert says the results met the company’s expectations. Revenues have been affected by foreign exchange rates and retailer inventory reductions.

Worldwide sales were down 15% to US$785.6 million versus last year’s quarterly results of US$919.3 million. Domestic gross sales fell by 6% and international gross sales dropped by 23%. The company’s brands also took a hit, with worldwide gross sales for Barbie down 5%, Hot Wheels down 3%; core Fisher-Price down 17% and American Girl down 4%;

Other girls brands sales dropped by 27% due to declines in unit sales of Polly Pocket and High School Musical doll lines. In the wheels category, which includes Hot Wheels, Matchbox and Tyco R/C, revenue took a 14% drop, driven by declines Speed Racer sales, while product sales in the entertainment division plunged 21% dip due to a slowdown in demand for Disney Cars and Speed Racer products.