Mattel CEO Promises 'Rapid Redo' as Sales Drop Continues
Mattel Inc.'s (MAT) new chief executive, Christopher Sinclair, pledged a "rapid redo" of the company culture to develop more creative toys and sell them better, after Mattel(MAT) posted its sixth straight quarter of sales declines.
Two weeks after getting the permanent CEO role, Mr. Sinclair offered broad plans to try to fix the world's largest toy maker. Those include working faster to develop toys, encouraging partnerships with technology companies, improving displays at retailers, and telling better stories around top brands like Barbie and Thomas the Tank Engine.
"The board and I don't want to waste time in moving forward with the necessary changes to revitalize the business," Mr. Sinclair said Thursday.
The assessment came as Mattel(MAT) posted another quarter of sales declines, largely due to the stronger dollar. Overall sales fell 2.5% to $922.7 million, with an 8% increase in North America that was offset by a 14% decline in its international division. The company reported a loss of $58.2 million, widening from a year-earlier loss of $11.2 million.
The stronger dollar dragged down results for long-struggling brands Barbie and Fisher-Price. Barbie sales fell 14%, the sixth straight double-digit decline, while Fisher-Price's fell 3%, its sixth straight decline.
Mattel (MAT) is trying to recover from a tough three-year stretch when the company's culture became bogged down by bureaucracy and what some saw as excessive meetings, while designers felt they weren't free to create innovative toys, The Wall Street Journal previously reported. After sales fell 5.6% last holiday season, Mattel(MAT) fired CEO Bryan Stockton, replacing him with Mr. Sinclair, a longtime board member.
Mattel (MAT) had been trying to rejuvenate its creative culture with the return of Richard Dickson, who at one point led Barbie's revival before leaving for a role at an apparel company. But his arrival last May came too late to salvage the holiday season.
Still, Mr. Dickson was promoted to chief operating officer earlier this month, an indication he is being tested for eventually taking the top job. He is working closely with Mr. Sinclair on the turnaround.
First-quarter results don't provide a good bellwether for the toy industry, as sales are heavily weighted toward the winter holiday season. Mattel(MAT) typically does around one-sixth of its sales during the first quarter.
Some brands posted better results in stores, due to less inventory left on shelves following the holidays than in the prior-year period. Barbie's retail sales rose double-digits in the U.S., while Fisher-Price's rose at a mid-single- digit rate globally in the first quarter.
The results, including a strong indication that Mattel's(MAT) generous dividend would be maintained, relieved investors. Mattel(MAT) shares rose nearly 6.5% in after-hours trading to $26.90. So far this year, Mattel(MAT) shares have lost 18%, making it one of the worst performers in the S&P 500.
Mattel (MAT) offered more signs that business isn't as usual. Mr. Dickson has been quick to seal partnerships with Google Inc. and other technology companies to modernize some of its older toys. Mattel(MAT) also on Thursday said it would partner with Quirky, a platform that links companies with inventors to develop new products.
There is urgency for Mattel(MAT) to act. Wells Fargo analyst Timothy Condor on Thursday wrote that if Mattel(MAT) doesn't lay out a clear turnaround plan or if it stumbles any more, it would be ripe for an activist to call for more upheaval.
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