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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.

Mattel is one of the largest toy makers in the world. Its products include Barbie and Polly Pocket dolls, Fisher-Price and Thomas & Friends toys, Hot Wheels and Matchbox cars, and American Girl dolls and books. Mattel also sells action figures and toys based on Walt Disney, Warner Bros., and NBCUniversal movies, WWE Wrestling, Nickelodeon characters, and the popular Minecraft video game. Other products include games (UNO), educational toys, and puzzles. Mattel is trying to reduce its reliance on its biggest customers -- Walmart and Target -- through internet sales and by branching into media licensing of its popular brands. The North America region accounts for nearly 65% of sales. 

Operations

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

The North American segment, which makes up nearly 50% of Mattel's total sales, markets and sells toys in the US and Canada through the Power Brands and Toy Box categories. Power Brands toy lines include Barbie fashion dolls, Hot Wheels, and Fisher-Price and Thomas & Friends. The Toy Box category includes both Mattel-owned brands and licensed partner brands.  Owned Toy Box brands include MEGA, Polly Pocket, and Enchantimals, while partner Toy Box products have ties-ins with the likes of Disney, WWE Wrestling, Nickelodeon, and Warner Bros.

Products marketed by the International segment (some 45% of sales) are generally the same as those in the North America segment, although some are tweaked for international markets. Mattel's products are sold directly to retailers and wholesalers in Europe, Latin America, and Asia, Australia, and New Zealand, and through agents and distributors in those countries where Mattel has no direct presence.

The American Girl segment (just over 5% of sales) is a direct marketer, children's publisher, and retailer of the American Girl line of historical and contemporary character dolls, books, and accessories. The segment also makes products under the Truly Me, Girl of the Year, and Bitty Baby brands. 

 

Geographic Reach

El Segundo, California-based Mattel fills toy chests in more than 150 countries. The toymaker sells products across North America, Europe, Latin America, and Asia. North America accounts for nearly half of total sales. Europe is the company's second-largest market, generating about 20% of Mattel's total sales. Latin America and Global Emerging Markets each bring in just under 15%.

Sales and Marketing

In its North America segment, products are sold to retailers, and to a lesser extent, wholesalers.  The International segment sells directly to retailers and wholesalers in Europe, Latin America, Asia, Australia, and New Zealand. Mattel also operates about 20 American Girl retail stores and sells products through its various websites. The company's two largest customers –- Walmart and Target – together account for nearly 35% of sales.

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

Mattel's revenue has been in steady decline the last five years, falling 25% between 2014 and 2018. The company has struggled as video games compete with traditional toys for children's play time, and amid the bankruptcy and subsequent liquidation of one of Mattel's largest customers –- Toys "R" Us. 

Sales in 2018 decreased 8% to $4.5 billion compared to $4.9 billion in 2017. Mattel's Barbie and Hot Wheels products saw growth of 14% and 7%, respectively. However, sales of most other major categories declined in 2018, including American Girl (-28%), Toy Box brands (-16%), and Fisher-Price and Thomas & Friends (-13%).  Revenue dipped across all reportable geographic segments. The North America segment was down 5% and International revenue fell 7%. Sales in Europe and Latin America dropped 3% and 2%, respectively, and the Global Emerging Markets segment saw sales decrease 17%. 

Mattel posted a net loss of $531 million 2018, which was an improvement over the $1.1 billion loss in 2017. The reduced net loss in 2018 was primarily due to lower income tax expense and cost reduction efforts.  

Cash at the end of 2018 was $595 million, a decrease of $485 million from the prior year. Cash from operations contributed $27 million to the coffers, while investing activities used $161 million, mainly for capital expenditures. Financing activities used $285 million, primarily for payments on long-term borrowings.

Strategy

After losing one of its biggest customers when Toys "R" Us liquidated in early 2018, Mattel has refocused the company around leveraging the intellectual property (IP) of its popular toy brands.

Mattel is flipping the narrative on the business model of making toys based on popular movies and is venturing into making movies, TV shows, and digital gaming based on its iconic toys. In 2018 the company created a new Global Franchise Management organization that aims to extend its brand portfolio into new opportunities including consumer products, digital gaming, live events, and strategic partnerships. 

That same year Mattel launched Mattel Films, a company division tasked with bringing Mattel toys to life in feature motion pictures. The company has inked deals with major studios to make films around some of Mattel's most storied franchises, including Barbie and Hot Wheels (with studio partner Warner Bros.), Masters of the Universe (Sony Pictures), American Girl and View-Master (MGM), and Magic 8 Ball (Blumhouse Productions). 

In 2019 the company announced its Mattel Television unit would launch 22 new animated and live action TV programs based on the company's characters and franchises. The episodic shows will span several genres including action adventure, humor, game shows, and music, and run the demographic gamut from toddlers and preschoolers to teens and families. 

Mattel has also restructured its brand strategy to focus its best talent on managing Mattel's entire portfolio instead of individual franchises. At the same time Mattel will maintain its focus on its core Power Brands as category flagships. Mattel is also fostering closer collaboration among its design and development teams to bring the best new product ideas to the forefront more quickly. 

Company Background

A small California toy manufacturer began operating out of a converted garage in 1945, producing dollhouse furniture. Harold Matson and Elliot Handler named their new company Mattel, using letters from their last and first names. Matson soon sold his share to Handler and his wife, Ruth, who incorporated the business in 1948.

The company's toy line had expanded by 1952 and sales exceeded $5 million. Sponsorship of Walt Disney's Mickey Mouse Club (debuted 1955), a first in toy advertising.

In 1959 Mattel introduced the Barbie doll, named after the Handlers' daughter, Barbara, and later introduced Ken, named after their son. Barbie, with her fashionable wardrobe and line of accessories, was an instant hit.

Mattel went public in 1960, and within two years sales had jumped from $25 million to $75 million. It launched the popular Hot Wheels miniature cars line in 1968.

The Handlers were ousted from management in 1974. The new management moved into non-toy businesses, adding Western Publishing (Golden Books) and the Ringling Brothers-Barnum & Bailey Combined Shows circus in 1979.

In April 2011 a federal jury sided with MGA Entertainment in the long-running legal battle over ownership of the billion-dollar Bratz doll franchise. The jury rejected Mattel's copyright infringement claims. Instead, it found that Mattel has stolen trade secrets from MGA.

Mattel, Inc.

333 CONTINENTAL BLVD
El Segundo, CA 90245-5032
Phone: 1 (310) 252-2000

Stats

Employer Type: Publicly Owned
Stock Symbol: MAT
Stock Exchange: , NASDAQ
President and COO: Richard Dickson
CEO: Margaret H. Georgiadis
Chairman: Christopher A. Sinclair
Employees (This Location): 1,700
Employees (All Locations): 27,000

Major Office Locations

El Segundo, CA

Other Locations

El Segundo, CA
Los Angeles, CA
San Bernardino, CA
Scottsdale, CA
Lone Tree, CO
Westminster, CO
Miami, FL
Miramar, FL
Orlando, FL
Natick, MA
East Aurora, NY
New York, NY
Old Westbury, NY
Bethlehem, PA
Dallas, TX
Fort Worth, TX
Deforest, WI
Middleton, WI
Wilmot, WI
Bengaluru, India
Guwahati, India
Kolkata, India
Mumbai, India
Nagpur, India
Navi Mumbai, India
Fresnes, France
Issy Les Moulineaux, France
Langeais, France
Tsim Sha Tsui, Hong Kong