There’s some good news from Mattel
Hidden within Mattel’s announcement of plunging sales and massive layoffs were two bright spots that may be the key to the toymaker’s turnaround — and they’ve been around for a combined 100-plus years.
Barbie, the 59-year-old doll that’s Mattel’s biggest brand, had a 12 percent jump in sales in the second quarter, its third straight gain. Hot Wheels, which just celebrated its 50th birthday, had a 21 percent surge in revenue.
What’s behind the revival in old-school brands? A strategy that’s summed up in company Power Point presentations as “giving them a new view of what they’ve been watching all along.” The “them” refers to today’s young parents, who may have grown up with Barbies and Hot Wheels only to snub them in favor of educational apps and fancy gadgets for their own kids. Mattel is trying to lure those customers back by recasting the toys’ image to play up not only the nostalgia but a newer notion: they’re beneficial to child development.
The sales gains indicate this new view may be taking hold.
“When you apply the right strategy behind these brands, you cannot just turn them around, you can put them on a path of accelerated growth,” said Ynon Kreiz, who in April became Mattel’s fourth chief executive officer since 2014. “We’re going to take this same approach with the rest of the company.”
A broader turnaround is still a challenge. Mattel’s total revenue declined 14 percent to $841 million in the second quarter, missing Wall Street projections, as other major brands, like Fisher-Price and American Girl, sank. The El Segundo, California-based company, hit hard by the liquidation of retailer Toys ‘R’ Us Inc., also said it was eliminating more than 2,200 jobs, or about 22 percent of its corporate workforce, as part of a cost-cutting plan started last year.
But the growth of Hot Wheels, the second-largest brand, and especially Barbie, which has seen sales decline in three of the past four years, is encouraging, according to Gerrick Johnson, an analyst at BMO Capital Markets.
“Everything they reported on Barbie and Hot Wheels was positive,” said Johnson, who recommends buying Mattel’s stock.