Mattel Barbie technique can revitalize American Lady, Fisher-Worth, CEO says

If there’s one factor Mattel CEO Ynon Kreiz needs shareholders to remove on Thursday, it is the ability of Barbie.

Because the toymaker faces activist strain from Barington Capital, particularly around its strategy with the Fisher-Worth and American Lady manufacturers, it is placing forth Barbie as a blueprint of what is doable on the toy firm, with an investor presentation Thursday.

“Our job is to take these timeless brands and make them timely,” Kreiz informed CNBC forward of the presentation.

Since taking the helm of Mattel in 2018, Kreiz has initiated a turnaround plan for the corporate that has seen the revival of main manufacturers, together with Barbie, and a 44% enhance in share worth. He is touted the Mattel “playbook,” the corporate’s technique for taking beloved franchises and making them obtainable to shoppers throughout a number of segments.

With “Barbie” — the eponymous movie, directed by Greta Gerwig and nominated for eight Oscars this yr — that plan has come to fruition.

“The idea was to find ways to create multiple touch points, to build strong toy brands,” stated Kreiz. “And once you have the established fan base and cultural resonance around brands, this is where you extend them to other experiences, other products, other opportunities to connect with your fans.”

“The ‘Barbie’ movie was really a manifestation of that very much a showcase of how we think about the opportunity in front of us,” he stated.

Gerwig’s “Barbie” generated practically $1.5 billion on the world field workplace by tapping into popular culture relevance — each the reverence and revulsion for the toy model felt by shoppers for greater than six many years. The movie’s success led to round $125 million in associated toys and client merchandise gross sales, like sweatshirts emblazoned with the phrase “I am Kenough” and Mattel’s share of the film ticket proceeds.

“We’re now thinking of people who buy our products not just as consumers but as fans,” Kreiz stated.

Beginning in July, the film will go on a 37-city tour to completely different music venues, accompanied by the Sinfonietta, an all-women’s orchestra. After which there’s this Sunday’s Academy Awards, for which “Barbie” is nominated for appearing awards, greatest unique track, greatest costume design and greatest image, amongst others.

“Whether we’re talking about products, entertainment, television, music, publishing, digital gaming, all of it we’re creating an ecosystem of true franchise flywheel,” stated Josh Silverman, chief franchise officer at Mattel.

A mixture of fixing client buying habits and the disappearance of Toys R Us led to important gross sales declines for each manufacturers in recent times. In simply the final yr, net global sales for American Girl were down 9%. For the corporate’s toddler, toddler and preschool section, which incorporates Fisher-Worth, gross sales had been down 10%.

Activist investor Barington Capital wrote a letter to Kreiz forward of the corporate’s February earnings report that stated it believes “these brands are now detracting from the success at Mattel’s other segments, and hurting shareholder value.”

Mattel, nonetheless, nonetheless sees worth in continued funding in these manufacturers and had already begun efforts to revitalize American Lady and Fisher-Worth previous to the activist investor’s February letter, Kreiz stated.

American Lady was seeing gross sales weaknesses even earlier than the pandemic compelled retail areas to shutter. Copycat dolls that appeared like the long-lasting American Lady dolls packed cabinets for a fraction of the value, and the once-alluring experiential purchasing related to the model’s flagship shops had dissipated.

Whereas American Lady dolls may be bought on-line, e-commerce hadn’t traditionally been Mattel’s fundamental technique. A lot of its advertising was put towards selling retail shops with their cafes and doll hair salons and its mailed catalog.

The American Lady model did emerge from the pandemic leaner, with fewer retail areas, an even bigger push for direct-to-consumer on-line purchasing and a renewed give attention to modernizing its dolls for a brand new era. Gross sales in 2021 even rose 5%. Nevertheless, they fell once more in each 2022 and 2023.

In terms of to the American Lady model, Kreiz admits that the challenges “were not product driven,” however moderately a problem with its industrial technique.

He stated the model will see development in its flagship shops, extra product innovation and expanded licensed leisure going ahead, together with a partnership with Disney princesses and a movie mission with Paramount.

“We think there’s some real opportunities to continue to grow the brand and extend the story that exists within American Girl thoughtfully, and we want to do it authentically,” stated Silverman. “The franchise is very much the bridge between toys and entertainment.”

Mattel executives remained tightlipped about what to anticipate from an upcoming American Lady film, which at present doesn’t have a launch date.

“We’re working closely right now with a writer to unlock that story,” stated Lisa McKnight, Mattel’s chief model officer. “We believe it will be a great opportunity for the brand when the film comes out.”

Beginning this fall, the corporate is relaunching Barney with an animated series, with a product line to observe in 2025. Marc Forster (“Quantum of Solace” and “Finding Neverland”) has additionally been tapped to direct and produce a movie based mostly on the Thomas & Associates franchise.

“We’re going to evaluate, curate, incubate and relaunch properties in the preschool space with a full franchise capabilities,” Silverman stated.

These manufacturers fall inside Mattel’s billion-dollar toddler, toddler and preschool division, wherein the corporate has been trimming fats and emphasizing modern methods to develop over the previous couple of years.

“It’s a big business, and it’s a complex business,” stated McKnight. “And, so, what we’ve done over the past few months is really gotten under the hood and acknowledge that there’s sort of two fundamental aspects. There’s the core of the business, which is for infants and toddlers, [where] parents are really the the purchasers. And then there’s a preschool entertainment business. This is really driven by kid demand and fueled by content.”

Fisher-Worth makes up the majority of the overall division, contributing round 70% to 80% of the division’s income yearly. In 2023, internet gross sales for Fisher-Worth had been round $850 million, a 9% drop from the yr prior.

Weighing closely on Fisher-Worth are two segments that Mattel is actively exiting — Energy Wheels, battery operated ride-on autos, and child gear. Kreiz stated Mattel does not have a “unique advantage” with regards to these things and faces steep competitors for market share. He additionally famous that a lot of the losses within the toddler, toddler and preschool division had been pushed by these exits.

In the meantime, Mattel is working to convey extra modern product to the greater than 90-year-old model, even tailoring the colour and materials of kids’s developmental toys to be extra “aesthetically attractive” to youthful mother and father.

“We’re starting to look at the fabric choices and the color palettes for those items … that work nicely with with home decor,” McKnight stated, noting that millennial mother and father usually need child toys that higher match their inside adorning types.

Mattel can also be introducing a brand new line to the Fisher-Worth portfolio of wooden toys, launching completely at Walmart in North America this spring and globally within the second half of 2024.

“It’s a good looking product that people feel good having out in a display, and it’s made from sustainable materials which will also which is also very important to this customer,” McKnight stated.