Mattel, Inc. at a Glance

Uppers

  • The world's number one toy maker.
  • The company is on a roll, having posted good results in recent years.

Downers

  • The company has been involved in several controversies including product recalls.
  • Fierce competition from rival toy makers including Bandai, Hasbro, Leap Frog, Lego and other.

The Bottom Line

  • The world's number one toy maker is doing a lot of the right things right now and is poised to remain in the top spot for years to come, but it faces plenty of challenges.

About Mattel, Inc.

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 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.

Operations

Mattel operates three business segments: North America, International, and American Girl.

The North American segment, which makes up around 50% of Mattel's total sales, 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, BOOMco, 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, Laugh & Learn, BabyGear, Imaginext, Dora the Explorer, Shimmer and Shine, Thomas & Friends, Minnie Mouse, Octonauts, Mickey Mouse Clubhouse, Disney's Jake and the Never Land Pirates, and Power Wheels.

Products marketed by the International segment (some 40% 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 (approx. 10% 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 more than 50% of all sales, while the Fisher-Price branded products generate some 30%. The company's American Girl brand brings in 10% of sales. The Construction and Arts & Crafts branded products bring in the remainder.

Geographic Reach

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 accounts for around half of total sales. Europe is the company's second-largest market, generating about a quarter of Mattel's total sales. Latin America and the Asia-Pacific region both bring in around 10% each.

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 ($1.1 billion in sales), Toys "R" Us ($600 million), and Target ($400 million) are the company's three largest customers, altogether accounting for nearly 40% of its worldwide sales each year.

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.

Financial Performance

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.

In fiscal 2016 sales fell 4% to $5.5 billion due to a sharp fall in the Other Girls product category and unfavorable currency exchange effects, partially offset by increases in Barbie, Wheels, and Entertainment. Fisher-Price posted modest 3% growth, while American Girls Brands was flat.

Net income fell 14% to $318 million due to lower gross profits, partially offset by lower SGA expenses and lower advertising. Gross profits were impacted by currency effects and higher input costs. Mattel's Funding Our Future cost cutting program reduced expenses by $60 million, and it reduced compensation costs by $36 million and severance and restructuring costs by $32 million.

Cash from operations fell 195 to $594.5 million due to higher working capital usage and lower net income.

Strategy

With sales declining and Hasbro and Lego threatening to seize Mattel's long-held toy crown, the company launched in 2017 a strategic growth plan based on five pillars. The pillars are: 1) build its power brands into 360-degree play systems and experiences; 2) drive emerging market growth via digital; 3) strengthen its innovation pipeline; 4) seek cost efficiencies through restructuring; and 5) shake up its culture.

The 360-degree play approach means building out its key brands into physical and digital space and creating a community of shared interest around them. Moving away from being purely a seller of toys, its physical products will be supplemented by video games, particularly on mobile platforms, and storytelling.

Its emerging market growth strategy rests on deepening relationships with Chinese parents in particular. It struck a deal with Chinese e-commerce giant Alibaba to sell learning products based on its Fisher-Price toys. The emphasis on learning products is hoped to chime with the "Tiger Mother" archetype that pushes her child to succeed in school.

To bolster its innovation pipeline, Mattel is democratizing its approach by opening up product ideas to amateur inventors, who can now submit ideas via an online portal. Early successes of this new approach include Artsplash, which sold out online and in Toys "R" Us in short order.

Following on from its Funding Our Future cost savings program was saved around $295 million in 2015-16, Mattel is further refining its operations with the goal of saving another $150-200 million. It also aims to drive down speed to market from 18 months to just nine.

The fifth pillar is around bringing in fresh talent in the areas of brand management, commercial, manufacturing, connected product development, e-commerce, content, and digital marketing.

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.

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Mattel, Inc.

333 Continental Blvd
El Segundo, CA 90245-5032
Phone: 1 (310) 252-2000
Fax: 1 (310) 252-2179

Stats

  • Employer Type: Public
  • Stock Symbol: MAT
  • Stock Exchange: NASDAQ
  • CEO: Margaret H. Georgiadis
  • CEO: Margaret H. Georgiadis
  • Chairman: Christopher A. Sinclair
  • 2016 Employees: 32,000

Major Office Locations

  • El Segundo, CA

Other Locations

  • Scottsdale, AZ
  • Los Angeles, CA
  • San Bernardino, CA
  • Lone Tree, CO
  • Westminster, CO
  • Miami, FL
  • Miramar, FL
  • Orlando, FL
  • Natick, MA
  • Minneapolis, MN
  • Chesterfield, MO
  • East Aurora, NY
  • New York, NY
  • Old Westbury, NY
  • Bethlehem, PA
  • Dallas, TX
  • Fort Worth, TX
  • Laredo, TX
  • Deforest, WI
  • Middleton, WI
  • Wilmot, WI
  • Brussel, Belgium
  • Montréal, Canada
  • Woodbridge, Canada
  • Fresnes, France
  • Langeais, France
  • Tsim Sha Tsui, Hong Kong
  • Kolkata, India
  • Ciudad De Mexico, Mexico
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