'Our turnaround is now complete': Mattel takes victory lap after year of turbulence and growth - The Entrepreneurial Way with A.I.


Monday, February 14, 2022

'Our turnaround is now complete': Mattel takes victory lap after year of turbulence and growth


Dive Brief:

  • Mattel CEO Ynon Kreiz declared victory in the company's years-long turnaround efforts in its fourth quarter earnings report.

  • "We have made significant progress on our transformation strategy over the last few years, and our turnaround is now complete," Kreiz said in a statement.

  • Like rival Hasbro, the company reported sales increases for 2021 despite a highly disruptive global supply chain environment. Mattel's North American sales were up 22% in 2021 from the prior year and up 14% in Q4.

Dive Insight:

As for many brands and retailers, the supply chain challenges and added costs from last year were directly tied to what was otherwise great news for the industry: a surge in consumer demand. 

For toy companies, that demand has been pronounced all through the pandemic, with parents opening up their wallets to find ways to entertain kids in a disrupted world. According to the NPD group, U.S. toy sales increased 13% to $28.6 billion in 2021, with unit sales up 8%, all of that on top of strong growth in 2020

"There is no doubt that COVID-19 continued to impact consumer behavior in 2021," Juli Lennett, NPD Group vice president and industry adviser for toys, said in a January statement. "The disposable income diverted from other forms of entertainment was a contributor to the industry's growth as consumers continued to look for ways to entertain their children and themselves."

All of that has been a boon for the likes of Mattel and other large toy makers. On a call with investors, Kreiz issued a laundry list of successes from the year.

The chief said that the company gained share in every market it measured during 2021. For Q4, Mattel was the No. 1 toy manufacturer, had three of the top seven intellectual properties in the industry, and posted its sixth straight quarter of market share gain, according to Kreiz. 

"Our products resonated with consumers at levels we have not seen in years. We have also been very successful in making Mattel a partner of choice for the major entertainment companies and see this as another growth lever," Kreiz said, according to a Seeking Alpha transcript. "In addition to our own IP, we now have a formidable lineup of evergreen properties from Microsoft, Nickelodeon, Nintendo, Universal, Warner Brothers, WWE, as well as Disney."

On the IP front, Mattel recently announced in January that it had won the rights to make toys connected to Disney's Princess and Frozen franchises. (That's a role previously filled by Hasbro.)

Operationally, nothing came easy to either Mattel or Hasbro last year.

Mattel Chief Financial Officer Anthony DiSilvestro said that gross margins in Q4 fell 220 basis points, to 49.3%, due mainly to a 600 basis point hit from inflation for things like materials and ocean freight costs. Offsetting that were price increases (which added 150 basis points to margins in the second half of 2022) and double digit top-line growth.

Looking ahead, Mattel projects more growth, with guidance for revenue to rise another 8% to 10% for the fiscal year ahead "and an even stronger outlook for 2023," per the release.

via https://www.aiupnow.com

Ben Unglesbee, Khareem Sudlow