The holiday season wasn’t kind to Mattel, and its chief executive officer is paying the price. CEO Bryan Stockton resigned as the toymaker’s profit continued to drop.
The Washington Post story by Sarah Halzack had these details:
As recently as October, Bryan Stockton was touting his big plans for a turnaround of Mattel. The toy company’s chief executive told investors that he was planning to increase Mattel’s focus on reviving Barbie and Fisher-Price, core brands that had been in a slump. He outlined efforts to develop new toys and even lured an industry veteran back to the company who had helped reinvigorate Barbie sales once before.
But it appears Stockton has run out of time. On Monday, Mattel announced that Stockton had resigned as chief executive after just three years in the position and would be replaced by interim chief executive Christopher Sinclair.
“Mattel is an exceptional company with a great future but the Board believes that it is the right time for new leadership to maximize its potential,” Sinclair said in a statement.
On Stockton’s watch, profits sagged and some of Mattel’s most iconic toys struggled to remain relevant. Fisher-Price, the company’s baby-oriented toy line, saw sales fall 16 percent in the third quarter. And while Barbie still remains the top-selling doll brand in the world, its fan base is rapidly dwindling. Sales of Barbie tumbled 21 percent in the third quarter as the company said that fresh marketing and product innovation was failing to gain traction with young girls. Mattel said it saw a shocking 59 percent drop in profit during its important fourth quarter.
Reuters said in a story by Yashaswini Swamynathan that Mattel was unable to match Barbie’s previous popularity with new toys:
Stockton had pinned hopes on doll brands such as Monster High and American Girl to make up for slumping sales of Barbie, but they were never able to match Barbie’s popularity.
And another cloud looms: from 2016, Mattel will lose its license to make Disney Princess dolls to Hasbro Inc (HAS.O).
Mattel bought Canadian toymaker Mega Brands for about $460 million last year in an attempt to better compete with Denmark’s Lego, which has overtaken the U.S. company as the world’s biggest toymaker by sales. The unit has yet to add to profit.
Paul Ziobro and Chelsey Dulaney wrote for The Wall Street Journal that Stockton also had some management issues:
Some retailers found that Mr. Stockton wasn’t as involved in toy selection as counterparts at rivals such as Hasbro and Lego. He rarely accompanied retailers on tours of Mattel’s showrooms that showed off products for the coming year, according to former Mattel executives and retail executives.
The CEO recently changed tack and scheduled more meetings with the top U.S. toy retailers, a person familiar with the matter said. In addition, he delivered an edict late last summer trying to speed up decision-making and free up executives by putting rules around meetings—including one that said no meeting is to be held without a specific purpose.
Mr. Stockton also has made some important hires aimed at empowering the creative side. Last year, Richard Dickson, a Mattel veteran who led Barbie’s turnaround in the early part of this decade, was rehired as chief brands officer.
The efforts have been too little, too late, however. With its results weakening, Mattel is preparing for another major round of belt-tightening. In October, it announced plans to cut another $250 million to $300 million in annual costs.
The Fortune story by John Kell offered these details about the toymaker’s history and the decline of its brands:
For a long time, Mattel’s secret to success was the iconic, well regarded brands in its portfolio. Fisher-Price is known as a quality preschool brand, and Barbie has been around for more than 50 years. Mattel also relied on expansion abroad, and leaned on newer doll lines to continue to sell toys to girls as they aged, or as their interests changed. And, with less than 10% of the roughly $84 billion worldwide toy market, there was a lot of opportunity for Mattel to continue to expand even though the industry’s overall growth has stalled.
But sales haven’t grown, and some have blamed high price points (in particular for Fisher-Price), and a failure to churn out enough new hits to lure children to the company’s brands. For instance, Monster High was a huge hit when it debuted a few years ago and another doll line, Ever After High, is performing well, but Mattel hasn’t consistently released mega hits. And for every step forward Mattel takes — its acquisition of construction toy maker MEGA Brands, for example — it has faced a challenge elsewhere. For example, Mattel is losing the right to make Walt Disney’s DIS 0.26% dolls next year. Hasbro won that contract.
Traditionally, the girls business was Mattel’s to own while Hasbro — which sells Transformers, Nerf and other action figures — was known as the “boy toy company.” For decades, Lego sold a vast bulk of its construction kit sets to boys.
But those lines are now blurred. Hasbro’s girls business has grown strongly and is a far bigger threat, powered by My Little Pony and a Nerf line aimed at girls. Lego has developed girl-focused kits, giving it a better balance of gender appeal. Mattel hasn’t had as much success addressing the boys market.
Firing the CEO without a plan for going forward is likely to mean that it will be a while before Mattel returns to its previous glory. Employees will be more worried about who will take over and what direction the company will take, putting innovation on hold. And with the loss of Disney looming, that’s time it can’t afford to lose.
