Bandai Co. said Tuesday its net profit fell 21 percent to 11.23 billion yen for the year ended in March, dragged down by a weak performance in the United States.
The country's largest toy maker said its fiscal 2004 revenue rose 3 percent to 269.95 billion yen.
Bandai saw solid earnings growth at home, where items for both boys and girls enjoyed strong demand. Trading cards and video game sales were also good, it said.
But its U.S. operation suffered a sharp drop in revenue and posted losses as rival products took huge chunks of the toy market.
"Spider-Man dominated store shelves," President Takeo Takasu told a news conference, referring to products related to the blockbuster movie sequel.
He attributed the company's struggle in the United States to a poor expansion strategy of launching too many character products.
"We will focus on strong characters such as Power Rangers," Takasu said.
He said revamping Bandai's U.S. operation is already under way and expects it to return to profit.
The company reported it enjoyed strong sales of Tamagotchi worldwide, selling 6.5 million units for fiscal 2004.
Bandai and game maker Namco Ltd. announced earlier this month they will merge their operations under a holding company in September.