MATTEL, INC.

Mattel, Inc. Company Profile

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, and other licensed items. Mattel also sells action figures and toys based on Walt Disney and Warner Bros. movies. To satisfy techie kids, Mattel has accessorized Barbie with interactive games, software, and a line of MP3 players. The company has even licensed the Barbie name for eyewear. It also sells games (UNO) 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.

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 accounted for about 56% of revenue in fiscal 2012. Europe is the company's largest international market, generating some 24% of Mattel's total sales.

Operations

Prior to fiscal 2013 Mattel operated is business through geographic segments: domestic and international. The domestic segment was further divided into Mattel Girls & Boys Brands US, Fisher-Price Brands US, and American Girl Brands. The move has helped to facilitate decision-making by its retail customers and toy consumers and to simplify its organization.

The North American segment markets and sells toys in the US and Canada, as its name suggests, 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 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, 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 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. Mattel’s International segment revenue represented 44% of worldwide sales in 2012.

The American Girl segment 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 and Bitty Baby brands. American Girl also publishes best-selling Advice & Activity books and the award-winning American Girl magazine. In 2013 American Girl introduced Saige, the 2013 Girl of the Year doll. American Girl products are sold primarily in the US.

Sales and Marketing

Mattel capitalizes on major events, such as movie releases, by focusing on product tie-ins. In total, in 2012 the toymaker spent nearly $718 million (about 11% of net sales) on ads and promotion, up from $700 million, $647 million, and $610 million in 2011, 2010, and 2009, respectively. Mattel also promotes its toys and characters through online and broadcast media. In early 2013 its animated superhero Max Steel debuted on Disney XD in the US and globally on major network operators. A corresponding interactive Web presence also launched.

The North America segment markets and sells toys in the US and Canada through the Mattel Girls & Boys Brands and Fisher-Price Brands categories. 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. Mattel also has retail outlets in Latin America and Europe that serve as outlets for its products. American Girl products are sold directly to consumers, and its children’s publications are also sold to certain retailers. Mattel supports its product lines with extensive advertising and consumer promotions. Advertising takes place at varying levels throughout the year and peaks during the traditional holiday season. Advertising includes television and radio commercials, magazine, newspaper, and internet advertisements, and social media. Promotions include in-store displays, sweepstakes, merchandising materials, and major events focusing on products and tie-ins with various consumer products companies.

Wal-Mart Stores ($1.2 billion), Toys "R" Us ($700 million), and Target ($500 million) are the company's three largest customers, altogether accounting for 37% of its worldwide sales.

Financial Performance

The world's largest toy maker has seen its sales and profits rise since fiscal 2008. Mattel’s sales increased by 2% to $6.42 billion in fiscal 2012 from $6.27 billion in 2011, while its profits increased by 1%. The company attributes the growth to increased revenue across all segments. Sales within the North American region, which includes the North America and American Girl segments, increased 2% in 2012 as compared to 2011. The increase in gross sales within the North American region was driven primarily by higher sales of key brands, including Monster High, American Girl, and Hot Wheels, partially offset by lower sales of CARS 2 products resulting from the timing of the movie release during 2011. Sales in the International region, which includes the International segment, increased 4% in 2012 as compared to 2011, with unfavorable changes in currency exchange rates of 6 percentage points.

Strategy

In 2013 Mattel looks to capitalize on Fisher-Price’s global growth opportunities, boost growth in its key brands (Barbie, Monster High, American Girl, and Hot Wheels), launch new franchises (Max Steel), optimize its entertainment partnerships with theatrical releases (Superman, Frozen, Planes, and Turbo) and television properties, and continue to expand its international footprint. In fall 2013 the toymaker partnered with Dolphin Entertainment to develop a feature-length, live-action movie based on Mattel's franchise property Max Steel. The movie is slated for release in late 2014.

It also aims to improve its operating margin by sustaining its gross margin within the low-to-mid 50% range and by launching Operational Excellence 3.0, the next phase of its cost savings program. Operational Excellence 3.0 targets additional cumulative cost savings of some $150 million by the end of 2014, with up to 70% of the expected savings to be realized in gross margin. Mattel also expects to generate significant cash flow, balanced in part by a disciplined, opportunistic, and value-enhancing cash deployment.

To target foreign sales, the company in 2012 acquired London-based HIT Entertainment for some $680 million in cash. HIT Entertainment owns popular preschool brands such as Thomas & Friends, Barney, and Bob the Builder.

Another stubborn problem for Mattel -- and the broader toy industry -- in recent years has been product recalls. Its Fisher-Price business in fall 2010 agreed to recall millions of kids' products, for a variety of potential risks, stemming from a handful of injuries. The recall came three years after a spate of recalls in 2007, spurred by lead-laden Chinese-made products.

Mergers and Acquisitions

With an eye on taking on LEGO, Mattel acquired Canada's MEGA Brands, the maker of Mega Bloks construction blocks, in April 2014. Mattel paid $460 million in cash to acquire the company, LEGO's biggest competitor.

Awards and Recognition

In 2013 Mattel was named as one of Fortune magazine's "100 Best Companies to Work For" for the sixth consecutive year and was named one of the "World’s Most Ethical Companies" by Ethisphere Magazine.

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MATTEL, INC.


333 Continental Blvd
El Segundo, CA 90245-5032
Phone: 1 (310) 252-2000
Fax: 1 (310) 2522179
www.mattel.com

STATS


  • Employer Type: Public
  • Stock Symbol: MAT,
  • Stock Exchange: , NASDAQ
  • Chairman and CEO: Bryan Stockton
  • EVP Global Operations: Peter Gibbons
  • Chairman and CEO: Bryan Stockton

Major Office Locations

  • El Segundo, CA

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