Barbie’s on a roll — good news after Mattel’s dismal quarter
Playing to millennial nostalgia, the toymaker finds a unique way to revive itself
NEW YORK— Hidden within Mattel Inc.’s announcement this week 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 per cent jump in sales in the second quarter, its third straight gain.
Hot Wheels, which just celebrated its 50th birthday, had a 21 per cent surge in revenue.
What’s behind the revival in old-school brands?
Astrategy that’s summed up in company PowerPoint 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 favour 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,” Ynon Kreiz said.
In April, he 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 per cent 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, Californiabased company, hit hard by the liquidation of retailer Toys “R” Us Inc. in the U.S., also said it was eliminating more than 2,200 jobs, or about 22 per cent 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. “They have two brands really working.”
And the foundation of those gains is this new view, according to chief operating officer Richard Dickson, who’s spearheaded this strategy since returning to the company in 2014. Parents, who were already overloaded with choices for their kids, increasingly were considering these frivolous and disposable — Hot Wheels start selling at just 99 cents — and that placed a cap on their growth potential.
For Barbie, the issues were bigger: a growing perception of the brand as an outdated collection of stereotypes, like that all girls care about are clothes and boys, while setting an unrealistic standard of physical beauty. In an age of female empowerment, that smelled like death.
Dickson talks incessantly about the “purpose” of the company’s brands and how it should drive everything from products to marketing. For Barbie, that boils down to being good for girls. And this is not just that the doll is fun but that the play it inspires is a good — even great — child development tool.
“We’re re-framing our play as beneficial,” Dickson said in an interview.
It may seem far-fetched that an11.5-inch doll could engender creativity and ambition while a miniature car is a hotbed for critical thinking — and that parents would believe such a concept. But there is a growing movement of academics and educators pushing mounds of research that shows such openended play is paramount to developing these essential skills. Something as seemingly mundane as playing house is really role-playing that builds empa- thy, teamwork and communication.
“Play was absolutely crucial to human evolution,” said Peter Gray, a professor of psychology at Boston College who studies childhood with a Darwinian bent.
And the decline of playtime from all the structured activities that have been hoisted on kids is “clearly having harmful effects” like less resiliency and not being able to solve their own problems, he said.
Dickson has latched onto Mattel’s own research about the changing behaviours of millennial parents.
A rising number care more about what their kids consume — whether it’s food, entertainment or toys. And with the aftershocks of the Great Recession and globalization making life more competitive, they are spending on child development.
U.S. middle-class parents of a child born in 2015 are projected to dish out $38,000 on education and development from birth through age 17, according to the U.S. Department of Agriculture.
That’s a $10,000 inflation-adjusted increase, or a 35 per cent gain, from a decade earlier.