Mattel raises toy prices to fight higher costs

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Mattel also set a first-quarter cash dividend of 31 cents a share, reflecting an annual payout of $1.24. That represents a 35 percent increase from last year.

While tight cost controls did boost the company's profit in the fourth quarter, a stronger dollar and weakness in its Fisher-Price business hurt revenue in the period covering the Christmas selling season.

This year will be another when consumers and retailers will be "a little cautious," Stockton said on Tuesday.

The news came just weeks after smaller rival Hasbro Inc forecast weak sales for the fourth quarter, citing underwhelming post-Thanksgiving demand in the United States and Canada. The company plans to report results on February 6.

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International sales have been much higher for both Mattel and Hasbro, analysts have said. A stronger dollar, however, brings down the value of exported goods by U.S. companies.

Mattel, which derives roughly half its business from international markets, said fourth-quarter net sales rose 1 percent to $2.15 billion. Analysts on average expected $2.22 billion, according to Thomson Reuters I/B/E/S.