Barbie is the platinum blonde in power at Mattel, the #1 toy maker in the world. Its products include Barbie and Polly Pocket dolls, Fisher-Price toys, Hot Wheels and Matchbox cars, American Girl dolls and books, and various Barney, Ferrari, Disney, Nickelodeon, and other licensed brands. Mattel also sells action figures and toys based on Walt Disney and Warner Bros movies, as well as games (UNO), arts and crafts (MEGA BLOX, RoseArt), and puzzles. Mattel is trying to reduce its reliance on its biggest customers -- Wal-Mart, Toys "R" Us, and Target -- through its own catalog and Internet sales.
Mattel operates three business segments: North America, International, and American Girl.
The North American segment, which made up 50% of Mattel's total sales in 2015, markets and sells toys in the US and Canada through the Mattel Girls & Boys Brands and Fisher-Price Brands categories. In the Mattel Girls & Boys Brands category, Barbie includes brands such as Barbie fashion dolls and accessories, with the Ever After High, Polly Pocket, Little Mommy, Disney Classics, and Monster High lumped into the Other Girls Brands. Wheels include Hot Wheels, Matchbox, and Tyco R/C vehicles and play sets. Entertainment includes CARS, Disney Planes, Radica, Toy Story, Max Steel, WWE Wrestling, Batman, and Superman, as well as games and puzzles. The Fisher-Price Brands category includes Fisher-Price, Little People, BabyGear, Imaginext, Dora the Explorer, Bubble Guppies, Thomas & Friends, Mike The Knight, Octonauts, Mickey Mouse Clubhouse, Disney’s Jake and the Never Land Pirates, and Power Wheels.
Products marketed by the International segment (41% of sales) are generally the same as those developed and marketed by the North America segment, although some are developed or adapted for particular international markets. Mattel’s products are sold directly to retailers and wholesalers in most European, Latin American, and Asian countries, and in Australia and New Zealand, and through agents and distributors in those countries where Mattel has no direct presence.
The American Girl segment (9% of sales) is a direct marketer, children’s publisher, and retailer known for its flagship line of historical dolls, books, and accessories, as well as the My American Girl, Truly Me, Girl of the Year, and Bitty Baby brands. American Girl also publishes best-selling Advice & Activity books and the award-winning American Girl magazine. American Girl products are sold primarily in the US.
Looking at its brands, the Mattel Girl's and Boy's brand products generate 55% of all sales, while the Fisher-Price brand products generate nearly 30%. The company's American Girl brand brings in 10% of sales. The Construction and Arts & Crafts brand products bring in the remainder.
El Segundo, California-based Mattel fills toy chests worldwide. The toymaker sells products in more than 150 nations, across North America, Europe, Latin America, and Asia Pacific. North America accounted for 60% of of total sales during 2015. Europe is the company's largest international market, generating more than 20% of Mattel's total sales. Latin America generated another roughly 10% of sales, while Asia brought in the remainder.
Sales and Marketing
Mattel sells its products through its own retailers and wholesalers in most of the world and through agents and distributors in those countries where it has no direct presence. American Girl products are sold directly to consumers. Wal-Mart Stores ($1 billion), Toys "R" Us ($600 million), and Target ($500 million) are the company's three largest customers, altogether accounting for 37% of its worldwide sales during 2015.
Mattel capitalizes on major events, such as movie releases, by focusing on product tie-ins. It also promotes its toys and characters through online and broadcast media. Overall, the toymaker has been decreasing its advertising spend in recent years, spending $717.9 million on ads and promotion during 2015, down from $718 million and $750 million spent in 2014 and 2013, respectively.
The world's largest toy maker has seen its sales and profits decline in recent years as its markets and brands in the US and Europe have matured.
Mattel’s revenue fell 5% to $5.7 billion during 2015 mostly as International sales declined 15% with unfavorable foreign exchange rates. International sales were actually up 1% in constant currency terms on higher Hot Wheels and Fisher-Price Thomas and Friends product sales. North American sales grew 2% on a double-digit Hot Wheels and Minecraft product sales and higher WWE Wrestling product sales. American Girl sales fell 8% on lower Girl of the Year, Grace Thomas, and Truly Me product sales.
Revenue declines caused Mattel's net income to plunge 26% to $369.5 million. The toy maker's operating cash levels tumbled 17% to $734.6 million mostly because of the decline in earnings, but also due to higher working capital usage as it increased its accounts receivables, inventories, and prepaid expenses.
Mattel has looked to capitalize on global growth opportunities (such as with the Ever After High line), innovate for growth in its key brands (Barbie, American Girl, and Hot Wheels), expand its girls portfolio, invest in international markets, improve efficiencies in its supply chain operations, and build its online and brick and mortar retail presence.
The company carried out the girls and international parts of its strategy in 2014 when it partnered with high-end Mexican retailer El Palacio de Hierro to offer American Girl merchandise in its stores. In early 2015, Mattel's popular American Girl division partnered with Fashion Angels, a designer of tween girls' fashion-focused lifestyle and activity products, to have the designer make craft kits and fashion sketchbooks for girls to create fashion accessories for themselves and their American Girl dolls.
As part of its retail expansion strategy, the company in early 2015 announced plans to open its own retail stores in Nashville, Tennessee and Scottsdale, Arizona.
To cut its operating costs, the company in 2015 launched its Funding Our Future cost-savings program designed to simplify global operations by making its supply-chains more efficient, and by making structural and process improvements.
Mergers and Acquisitions
In January 2016, Mattel bought Fuhu, Inc., a developer of high-tech products for children and families that is best known for its Nabi Brand products, for $21.5 million. Also that month, the toy maker acquired Sproutling, Inc., which makes smart tech products for parents and families. Both of the acquired companies bolstered Mattel's digital and smart technology product offerings.
In April 2014, with an eye on taking on LEGO, Mattel acquired Canada's MEGA Brands, the maker of Mega Bloks construction blocks. Mattel paid $460 million in cash to acquire the company, LEGO's biggest competitor.