Mattel changes its toy story from flip tale to growth mode

Mattel Chairman and CEO Ynon Kreiz said it’s time to stop talking about Mattel as a turnaround story. The turnaround, he said today, is complete. Now and going forward, Kreiz said, Mattel is a growth story.

Mattel closed 2021 with fourth-quarter net sales up 10% and full-year sales up 19%. She gained market share, reduced debt, and her best-known brand, Barbie, experienced the biggest sales growth spurt of its lifetime.

“We expect to continue to grow and gain market share in 2022 and 2023, and I’m not stopping there,” Kreiz said on a conference call with analysts after announcing fourth-quarter results and of the full year that seduced Wall Street.

Mattel’s stock jumped more than 10% in after-hours trading following the 4 p.m. earnings release.

The toymaker easily beat Wall Street expectations for the quarter, with net sales of $1.79 billion, up 10%, and adjusted earnings per share of 53 cents.

Mattel has reduced debt, Kreiz and Chief Financial Officer Anthony DiSilvestro said, and improved its debt-to-adjusted EBITDA ratio to the point the company expects to be able to earn an investment grade this year that would give it more credit at lower cost.

This would position the company to fuel future growth with mergers and acquisitions, the executive said. Kreiz didn’t specify what types of acquisitions, but hinted that creative content businesses could be a priority.

Mattel and Hasbro are in a race to see which toymaker can make the most movies and TV shows based on their toy brands.

Mattel has deals for movies based on Barbie, Hot Wheels, He-Man, Rock ‘Em Sock ‘Em Robots, and Major Astronaut Matt Mason figure in the works, starring Hollywood personalities like Margo Robbie, Ryan Gosling, Vin Diesel and Tom Hanks lined up to play it.

Kreiz pointed out that Mattel has a strong sales force in almost all of its flagship categories and brands, but the brand that has clearly done the most to help rebuild Mattel is Barbie.

Barbie sales for the year rose 24% and it was ranked by research firm The NPD group as the top global toy property of 2021, an honor it also received in 2020.

During the conference call, Kreiz took a few minutes to gloat a bit at the symbolic blow that Mattel was able to win back the Disney Princesses and Frozen licenses, and hijack those licenses from its main rival, Hasbro.

“It’s a big win for Mattel,” Kreiz said. “Disney Princesses and Frozen together are one of the crown jewels of the Walt Disney Company – an enormous wealth of characters and stories.”

“It’s important to Mattel for three reasons,” Kreiz said. It expands Mattel’s portfolio as a leader in the doll category and will drive continued growth from 2023, he said. More importantly, Kreiz said, “it solidifies our position as the partner of choice as we continue to grow our relationships with major entertainment companies.”

“This is a symbolic step in our transformation strategy, but it is important to say that we plan to grow it from current levels. We have the capabilities, we have the expertise and we certainly know how grow and grow evergreen franchises,” he said.

Mattel and Kreiz have shown over the past two years that they can take one of the oldest evergreen properties, a doll called after its heyday at one point – Barbie – and turn it into a resurgent rising star.

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