(Photo Credit: Freddycat1)

After the closing bell struggling toy maker Mattel, Inc. (MAT) is expected to reveal widening quarterly losses of 9 cents per share. Estimize contributors also expect sales to tumble from $946 million last year to $898 million. Here are 3 reasons why Mattel is in trouble.

1. Barbie has an image problem

Let’s face it, Barbie hasn’t been cool for a long time. In an going public dialogue about how women’s bodies are misrepresented in media and advertising, Barbie has been accused of setting unrealistic expectations for young women.

In 2014 Barbie sales were down 16% compared to one year prior. That’s even worse than the company’s 7% total revenue decline. To make matters even more bleak, in September Mattel lost the rights to sell Disney (DIS) princess dolls to its chief rival Hasbro (HAS). Mattel can no longer depend on selling Frozen dolls going forward. 

With one of its core business shrinking by double digits, it’s no wonder analysts predict a soft quarter from Mattel.

2. Kids are playing with apps

For a children’s entertainment company Mattel is incredibly far behind the trend in mobile gaming. A plethora of companies have popped up on the success of a single hit in the space. Digital competitors are already closing in on Mattel’s receding size.

MAT Market Cap data by YCharts

Mattel is a toys and games company founded in 1945 with a $8.6 billion market cap. On the other hand we have companies like King Digital (KING) building $5.5 billion companies in about 10 years with only one successful franchise (Candy Crush).

Here’s a list of Mattel’s mobile games, have you heard of any of these?

3. Leadership questions

In January Mattel came out ahead of its regularly scheduled earnings announcement to disclose a 51% drop in holiday period profits and declare the resignation of CEO Bryan Stockton. 

In March Mattel brought Stockton back as a consultant in an unexpected move, agreeing to compensate him with $125,000 a month for the next year according to the Wall Street Journal. That’s quite a generous offer to a man who was run out of town less than 3 months ago.

Longtime board-member Christopher Sinclair was named CEO in Stockton’s stead. Given Mattel’s shortcomings and lack of direction, placing an insider in charge is a risky move. Investors will be keen to hear from Sinclair today and hope that he can offer a vision to turn the company around.