Mattel had a massive fourth quarter in which net sales grew 10% over the previous year to lead a 2% sales increase for 2020 overall. Net sales hit $1.625 billion in Q4 while full year sales topped $4.58 billion.
“This was a banner quarter for the company with our best performance in years,” says Mattel Chairman and CEO Ynon Kreiz. “In the midst of a pandemic and very challenging market conditions, our results exceeded expectations, with another major upswing in topline and a significant increase in profitability, as we gained global market share and continued to transform Mattel into an IP-driven, high performing toy company. The fourth quarter and full-year demonstrated the resilience of the toy industry and the priority that parents place on quality toys, trusted brands, and purposeful play.”
In Q4, Mattel experienced a 13% spike in overall North American net sales driven by 13% growth in gross billings for dolls, including Barbie (up 18%); a 7% gain in infant, toddler, and preschool, including Fisher-Price (up 11%) and Thomas & Friends; 12% growth in vehicles, including Hot Wheels (up 14%) and Matchbox; and 9% growth in the combined action figures, building sets, games, other categories which includes Star Wars: The Mandalorian The Child, UNO, and MEGA Brands. The long lagging American Girl segment increased by 9% in gross billings and 12% in net sales.
By itself, the action figure category declined due to year-over-year comps with Toy Story 4 product.
“The decline was partially offset by the Masters of the Universe collector toy line, which bodes well for the franchise re-launch this year,” Kreiz says. “We also continue to see positive results with some of our key evergreen licenses, particularly Minecraft, Jurassic World and Minions.”
Full year net sales in North America grew 7% overall while net sales in international markets fell 4% due largely to COVID-19-related closures.
Mattel revealed plans to implement a new “Optimizing for Growth” program intended to optimize operations and drive greater productivity to accelerate growth, and at the same time, further reduce its cost base. The new program integrates the previous “Capital Light” program going forward with several new productivity opportunities. Mattel expects to deliver $250 million in incremental cost savings by 2023.
On a call with analysts this afternoon, Kreiz addressed the upcoming entertainment slate which currently has 11 announced projects from Mattel Films in various stages of development. In addition to the recently announced UNO film, projects are in the works based on American Girl, Barbie, Barney, Hot Wheels, Magic 8 Ball, Major Matt Mason, Masters of the Universe, Thomas & Friends, View-Master, and Wishbone. Mattel Television has 17 shows and specials in active production with more than 25 in development, including The UNO Game Show and the recently announced Whac-A-Mole.
While the TV projects, including Masters of the Universe: Revelation should start debuting this year, cameras have yet to roll on any of the feature films.
“We’ve been doing a lot of work on scripts, and casting, and budget plans,” Kreiz says. “There’s more coming that we haven’t announced yet. The pipeline is building. We are also making great progress on the television side with numerous shows in production and more in development and expect that to continue to build. None of that [TV and film] is factored into our margin guidance that we provided. That margin is solely driven by the toy side of the business. As we always say, capturing value from our IP is part of our mid-to-long-term strategy. These projects do take time given the scale and the ambition and we’re going about them the right way. But given the level of interest, the quality of partners, the strength of these properties, we remain very excited about what this can do for us in the mid-to-long-term.”
