Mattel: IP-Driven High-Performing Toy Company

Mattel: IP-Driven High-Performing Toy Company
Source: Mattel

Mattel Inc. had a surprisingly good third quarter, rebounding from a rocky first half of the year and crushing analysts’ estimates.

The El Segundo-based toymaker reported a sales increase of 13% in North America paired with an 8% increase in international markets. Overall, sales for the quarter rose 10%. Year-to-date sales — which were down 15% in the first six months of the year — made gains and are now down just 2% for the first nine months of the year. Adjusted earnings per share hit $0.95 versus an expected $0.39 amid strong sales and continued cost-cutting measures.

“This was a very strong quarter for Mattel. We saw a major upswing in topline and a significant increase in profitability as we continued to make meaningful progress towards becoming an IP-driven, high-performing toy company,” says Mattel Chairman and CEO Ynon Kreiz. “The toy industry, as a whole, grew significantly and continues to demonstrate its resilience in challenging economic times. Mattel’s growth outpaced the industry as we gained share in key markets around the world and achieved growth in each of our four regions.”

Major gains were seen in the doll category which was up 24% fueled by a 29% boom in Barbie and the recent launch of Cave Club. Following a dip in the second quarter, the vehicles category came roaring back with an 8% increase driven by a 9% gain in Hot Wheels and strong performance from Matchbox. The company cites gains in Hot Wheels Monster Trucks and the new Hot Wheels Super Mario Kart line as being strong contributors. The company also gained traction in American Girl and its infant and preschool offerings as it cut losses. Direct-to-consumer (DTC) efforts increased 50% to become a 30% source of Mattel’s sales.

Masters of the Universe Origins – 2020/2021 lineup | Source: Mattel

Back in Action

The combined categories of action figures, building sets, games, and other challenger categories increased 14%. Kreiz notes that games and plush have been huge drivers with UNO holding strong as the No. 1 game item in the U.S, per NPD. Additionally, Mattel’s 11-inch plush version of The Child (Baby Yoda) from Star Wars: The Mandalorian was the No. 1 item in plush both for the third quarter and year-to-date according to NPD.

By itself, the action figure category took a slight hit due to comparisons with last year’s Toy Story 4 product offset partially by Jurassic World product, some of which is tied to the new Netflix series Jurassic World Camp Cretaceous and the return of some classic characters from Eternia.

“Jurassic World was up in the third quarter and year-to-date, in spite of being two years after the release of the [previous] movie as it continues to establish itself as an evergreen property,” Kreiz said on this evening’s earnings call. “We also successfully introduced the Masters of the Universe collectors toy line with more to come in anticipation of the franchise relaunch next year. The successful introduction of the product line this year, combined with this animated series will lay the groundwork for the holistic relaunch of this iconic franchise.”

Guidance Returns

Earlier this year, Mattel, like all other toymakers, suspended financial guidance due to uncertainty surrounding business in the COVID-19 era. According to new Chief Financial Officer Anthony DiSilvestro, who joined the company in June, Mattel now expects to end the year flat to a modest 1% increase. The real challenge now will be meeting the demand for the holiday season.

Kreiz confirmed that Mattel’s supply chain is running at 100% of its pre-COVID-19 levels, but that point-of-sale (POS) is outpacing the inbound shipments.

“We are working closely with our retail partners on the challenge of meeting the extraordinary growth in consumer demand heading into the holiday season,” Kreiz says.

Looking Ahead

Mattel continues to place emphasis on its mid-to-long-term strategy of building on its own IP across gaming and entertainment.

Mattel Films has 10 features in development, including titles based on American Girl, BarbieBarneyHot WheelsMagic 8 Ball, Major Matt Mason, Masters of the Universe, Thomas & Friends, View-Master, and Wishbone. Mattel Television is said to have 17 shows and specials in active production with another 25 in development. The division recently announced new seasons of Fireman Sam and Polly Pocket and a redesign of Thomas & Friends for its next season.

About the author

James Zahn

James Zahn

James Zahn, AKA The Rock Father, is Editor-in-Chief of The Toy Book, a Senior Editor at The Toy Insider and The Pop Insider, and Editor of The Toy Report, The Toy Book‘s weekly industry newsletter. As a pop culture and toy industry expert, Zahn has appeared as a panelist and guest at events including Comic-Con International: San Diego (SDCC) Wizard World Chicago, and the ASTRA Marketplace & Academy. Zahn has more than 30 years of experience in the entertainment, retail, and publishing industries, and is frequently called upon to offer expert commentary for publications such as Forbes, Marketwatch, the Wall Street Journal, the New York Times, USA Today, Reuters, the Washington Post, and more. James has appeared on History Channel’s Modern Marvels, was interviewed by Larry King and Anderson Cooper, and has been seen on Yahoo! Finance, CNN, CNBC, FOX Business, NBC, ABC, CBS, WGN, The CW, and more. Zahn joined the Adventure Media & Events family in 2016, initially serving as a member of the Parent Advisory Board after penning articles for the Netflix Stream Team, Fandango Family, PBS KIDS, Sprout Parents (now Universal Kids), PopSugar, and Chicago Parent. He eventually joined the company full time as a Senior Editor and moved up the ranks to Deputy Editor and Editor-in-Chief.