Last Updated on May 10, 2021 by Danielle
Mattel manages to turn around its struggling business in the 4th quarter of 2015.
Mattel has successfully turned around its struggling business and has brought some stability to it. This assertion is due to the fact that Mattel reported both higher revenue and profit for the fourth quarter of 2015. Barbie and several of its other key brands contributed to Mattel’s success.
Mattel is very encouraged by the results as are analysts and investors. Mattel achieved its goal of stabilizing the business after several years of declines. Barbie sales were eroding, cannibalized due to fierce competition from Lego and Frozen toys and Mattel has answered back and is gaining momentum in the toy industry. As of 2014, Lego overtook Mattel and became the #1 toy company in the world.
Mattel posted net income of $215 million for the fourth quarter of 2015, which was a 44 percent increase compared to the same period last year. Last year, during the same period, the company generated nearly $150 million. For the fourth quarter alone, that is an increase in net income of $65 million.
On a global scale, the company generated nearly $2 billion, which was not very different from last year’s fourth quarter results.
Examining the larger company and its individual brands, worldwide sales of Barbie increased 8%, Fisher-Price increased 13%, Hot Wheels and Matchbox increased by 26%. In contrast, American Girl sales decreased 14%.
It is important to note that sales were slower during the remainder of the year. For 2015, Mattel reported net income of $369 million, which represents a 26% decrease compared with 2014. However, it reported a 2% increase in worldwide sales. Although this is a marginal improvement, it does represent a shift in the right direction for Mattel, considering prior results and industry trends.
Still, Mattel faces a number of challenges to its business. The American Girl and Monster High brands are struggling. It may need to decide whether to release the brands from its portfolio or reinvent the brand to spark interest among consumers. Further, Mattel lost rights to rival Hasbro for the Disney Princess properties. However, Mattel’s COO, Richard Dickson, believes that this relationship could be strengthened since they already have licensing partnerships with Disney for Toy Story 4 and Cars 3.
Mattel plans to capitalize on Barbie’s sales growth. In fact, they have announced new Barbie Fashionista dolls with three different body types (tall, curvy, and petite), 24 hairstyles, and 22 eye colors. This represents a fundamental shift for Barbie, as Mattel appears to be finally responding to consumer criticism regarding Barbie’s lack of diversity and unrealistic proportions. Will it be one of the top toys in 2021 for Christmas? Mattel is hoping that with these changes now the dolls may better reflect its diverse audience and it may translate into increased popularity and ultimately more sales.