Mattel Changes Its Toy Story From Turnaround Tale To Growth Mode
Mattel Chairman and CEO Ynon Kreiz says it is time to stop talking about Mattel as a turnaround story. The turnaround, he said today, is complete. Now, and for the future, Kreiz said, Mattel is a growth story.
Mattel closed out 2021 with fourth quarter net sales up 10% and full year sales up 19%. It gained market share, reduced its debt, and its best known brand, Barbie, had the biggest sales growth spurt of her life.
“We expect to continue to grow and gain market share in 2022 and 2023, and I’m not stopping there,” Kreiz said during a conference call with analysts after announcing fourth quarter and full year results that wowed Wall Street.
Mattel’s stock jumped more than 10% during after hours trading, folowing the 4 p.m. earnings release.
The toy maker easily beat Wall Street’s expectations for the quarter, with net sales of $1.79 billion, up 10%, and adjusted earnings per share of 53 cents.
Mattel has reduced its debt, Kreiz and Chief Financial Officer Anthony DiSilvestro said, and improved its debt to adjusted EBITDA ratio to the point that the company expects to be able to achieve an investment grade rating this year that would give it more credit at lower costs.
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That would position the company to fuel future growth with mergers and acquisitions, executive said. Kreiz didn’t elaborate on what kinds of acquisitions, but hinted that creative content companies could be a priority.
Mattel and Hasbro are in a race to see which toy manufacturer can make the most movies and TV shows based on their toy brands.
Mattel has deals for films based on Barbie, Hot Wheels, He-Man, Rock ‘Em Sock ‘Em Robots, and astronaut action figure Major Matt Mason in the works, with Hollywood A-listers including Margo Robbie, Ryan Gosling, Vin Diesel and Tom Hanks lined to star in them.
Kreiz emphasized that Mattel enjoyed broad sales strength across nearly all of its categories and powerhouse brands, but the brand that clearly has done the most to help rebuild Mattel is Barbie.
Barbie sales for the year were up 24%, and it was ranked by research firm The NPD group as the top global toy property of 2021, an honor it also received in 2020.
During the conference call, Kreiz took a few minutes to gloat a bit about the symbolic coup Mattel pulled off in winning back the Disney Princesses and Frozen licenses, and luring those licenses away from its top rival, Hasbro.
“It is a great win for Mattel,” Kreiz said. “Disney Princesses and Frozen are together one of the crown jewels of the Walt Disney company – a huge wealth of characters and story lines.”
“It’s important for Mattel for three reasons,” Kreiz said. It scales up Mattel’s portfolio as the leader in the doll category, and it will drive ongoing growth starting in 2023, he said. Most importantly, Kreiz said, “it strengthens our position as a partner of choice as we continue to build our relationships with the major entertainment companies.”
“This is a symbolic milestone in our transformation strategy, but it is important to say we do expect to grow it from the current levels. We have the capabilities we have the expertise and we definitely know how to develop and grow evergreen franchises,” he said.
Mattel and Kreiz have shown over the past two years that they can take one of the oldest of the evergreen properties, a doll called past her prime at one point – Barbie – and make her a reborn, rising star.