The company, which designs and sells miniature toys based on Walt Disney, Batman and other characters, said pre-tax profits before exceptional charges were pounds 11.03m, down from pounds 17.8m a year earlier and the pounds 19.7m made in 1994. The shares gained 2.5p to 185p, but stand well adrift of the 375p peak they hit just before Christmas in 1995.
Bluebird's results come after a mixed year for toy retailers. Many reported lower-than-expected sales at Christmas, when they can make as much as half of a full year's profit, as consumers held back on spending. Hamleys, the UK's largest toy store, said in January it was disappointed with a 3 per cent year-on-year rise in Christmas sales.
Despite the profit setback, however, Martin Bunting, chairman, said the stock problems at Bluebird had largely been overcome. New products such as miniature Disney toys and toys based on Marvel comics such as Spiderman should lift sales this year, he said. Stock levels this year are "much closer to optimum''.
He said: "We have a very focused, newly streamlined and cash-generative business which should allow us to capitalise on the many opportunities for the continued development of Bluebird."
The company took an exceptional charge of pounds 1.1m to close a distribution and manufacturing site in Wales.
Mr Bunting said: "The decision to leave Dragonparc has been a difficult one to make and is a result of changes in market conditions and a consequential change in the nature of our business."
Shareholders will receive an unchanged 9p dividend, covered less than twice by earnings per share that fell from 24.2p to 16.4p. Bluebird intends to seek a further share buy-back authorisation at the next annual general meeting.