Bob the Builder sales setback

BOB The Builder's workmanship was questioned today after Merrill Lynch warned investors about his flagging appeal to children the world over.

Global revenue for the licence owner of the Bob franchise, HIT Entertainment, is predicted to fall from last year's £59m to £53.5m in the financial year just ended and £48m in 2004.

HIT's shares fell 14p to 269 1/2p as the broker warned that a revamp of the character may not start rebuilding sales for HIT until 2005. Key to Merrill's concerns is Bob's appeal to US toddlers, whose parents generate the lion's share of TV and merchandising sales.

Sales in America rocketed to £35.5m in 2002. But revenues for the year to 31 July are likely to show a fall to £30m and a further £4m tumble in the new financial year. Sales of the franchise have been worse than City forecasts. Figures already put out by the group showed the first half of last year down 3%. The second six months is predicted to have tumbled even faster.

'The key issue for me is what level does it go to before Bob starts picking up again,' said Merrill analyst Steve Liechti.

HIT's other characters, such as Thomas the Tank Engine and Pingu the Penguin, will attempt to take up the slack.

A spokesman for HIT said: 'Bob is exactly in line with our forecasts and he remains one of the world's most popular children's characters. We remain extremely confident about his long-term future.'