Mattel, Inc.
Mattel, Inc., a children's entertainment company, designs and produces toys and consumer products worldwide. The company operates through North America, International, and American Girl segments. It offers dolls and accessories, as well as content, gaming, and lifestyle products for children under the Barbie, Monster High, American Girl, Polly Pocket, Spirit, and Enchantimals brands; dolls and books under the American Girl brand name; die-cast vehicles, tracks, playsets, and accessories for kids of all ages, and collectors under the Hot Wheels, Monster Trucks, Matchbox, CARS, and Mario Kart brand names; and infant, toddler, and preschool products comprising content, toys, live events, and other lifestyle products under the Fisher-Price and Thomas & Friends, Power wheels, and Fireman Sam brands. The company also provides action figures, building sets, and games under the Masters of the Universe, MEGA, UNO, Lightyear, Jurassic World, WWE, and Star Wars brands; and licensor partner brands, including Disney, NBCUniversal, WWE, Microsoft, Nickelodeon, Warner Bros, and Sanrio. It sells its products directly to consumers through its catalog, website, and proprietary retail stores; retailers, including discount and free-standing toy stores, chain stores, department stores, and other retail outlets; and wholesalers, as well as through agents and distributors. Mattel, Inc. was founded in 1945 and is headquartered in El Segundo, California.
HistoryEdit
1945: Ruth Handler, Elliot Handler and Harold Matson begin collaboration in a garage
1959: Ruth Handler is inspired by her daughter and creates the first ever Barbie Doll
1960: Mattel becomes a PLC
1968: Hot Wheels invented
1971: UNO invented
1980: Mattel introduces the first diverse line of dolls
2023: New line of Disney Princess dolls launched through a multi-year global licensing partnership
Mattel recently announced a marvel style film multiverse with movies about Barbie, Hot Wheels and other Mattel products.
Mission and VisionEdit
Mattel states that their purpose and vision revolves around improving childhood and the market for toys in a way that empowers kids to reach their full potential and to encourage imagination.
Their mission is to create innovative products and experiences that inspire, entertain and develop children through play.
Mattel emphasises the importance relationships with their business partners and customers based on trust as well as their duty to act sustainably and promote diversity.
Mattel's key product attributes are quality, safety and value with their USP being that their toys deliver on their purpose and withstand the test of time.
Competitive AdvantageEdit
Portfolio: Mattel possesses a strong brand portfolio featuring household names that cater to a wide range of markets like Barbie for young girls, Hot Wheels for young boys and UNO for family fun of all ages. This means that Mattel can target a vast market and gather revenue from a lot of different sources
Partnerships & Collaboration: Mattel has several partnerships with Disney that include multi-year long deals as well as a partnership with their competitors Hasbro which include a Barbie themed Monopoly board in exchange fro Transformers themed UNO cards. These partnerships create more publicity for Mattel and therefore generate a larger brand presence for the company ensuring that Mattel remains relevant in the toy and entertainment industry.
Financial PerformanceEdit
| Millions of $ | 2022-31-12 | 2021-31-12 | 2020-31-12 |
|---|---|---|---|
| Revenue | $5,434.687 | $5,457.741 | $4,588.4833 |
| % Growth/Decline | -0.42 | 18.95 | 1.86 |
| Cost Of Goods Sold | $2,953.335 | $2,831.079 | $2,345.33 |
| Gross Profit | $2,481.352 | $2,626.662 | $2,243.103 |
| Admin Expenses | $1,805.837 | $1,897.1 | $1,940.239 |
| Operating Income | $675.515 | $729.736 | $374.736 |
| Non-Operating Expense | $171.18 | $258.798 | $197.079 |
| Pre-Tax Income | $504.335 | $470.764 | $177.657 |
| Income Tax | $135.851 | $-420.381 | $65.549 |
| Income After Tax | $368.484 | $891.145 | $112.108 |
| Earning Per Share | $1.10 | $2.53 | $0.35 |
Balance Sheet
| Millions of $ | 2022-31-12 | 2021-31-12 | 2020-31-12 |
|---|---|---|---|
| Assets | |||
| Cash | $761.234 | $731.362 | $762.181 |
| Recievables | $860.221 | $1,072.684 | $1,033.966 |
| Inventory | $894.064 | $777.184 | $528.474 |
| Pre-Paid Expense | $231.515 | $293.299 | $171.07 |
| Total Current Assets | $2,729.035 | $2,874.529 | $2,496.691 |
| Property, Plant & Equipment | $469.132 | $455.966 | $473.794 |
| Goodwill & Intangible Assets | $1,803.651 | $1,867.065 | $1,912.024 |
| Other Long-Term Assets | $385.591 | $343.944 | $288.098 |
| Total Long Term Assets | $3,448.626 | $3,519.363 | $3,038.199 |
| Total Assets | $6,177.661 | $6,393.894 | $5,534.89 |
| Liabilities | |||
| Total Current Liabilities | $1,187.748 | $1,598.253 | $1,355.379 |
| Long Term Debt | $2,325.644 | $2,570.992 | $2,854.664 |
| Other Non-Current Liabilities | $336.582 | $372.174 | $465.35 |
| Total Long Term Liabilities | $2,933.644 | $3,226.792 | $3,569.367 |
| Total Liabilities | $4,121.392 | $4,825.045 | $4,924.746 |
| Common Stock Net | $441.369 | $441.369 | $441.369 |
| Retained Earnings | $2,847.709 | $2,456.597 | $1,553.61 |
| Comprehensive Income | $-911.478 | $-941.271 | $-944.576 |
| Share Holder Equity | $2,056.269 | $1,568.849 | $610.144 |
| Total Liabilities And Equity | $6,177.661 | $6,393.894 | $5,534.89 |
Cash Flow Statement
| Millions of $ | 2022-31-12 | 2021-31-12 | 202-31-12 |
|---|---|---|---|
| Net Income | $393.913 | $902.987 | $123.579 |
| Total Depreciation And Amortisation | $182.179 | $184.313 | $193.451 |
| Other Non-Cash Items | $149.893 | $-356.832 | $54.293 |
| Change in Accounts Recievable | $197.902 | $-85.603 | $-92.28 |
| Change in Inventory | $-138.606 | $-290.018 | $1.813 |
| Change in Assets/Liabilities | $-21.997 | $-76.527 | $-12.563 |
| Cash Flow from Operating Activites | $442.842 | $485.463 | $285.696 |
| Net Change In Property Plant Equipment | $-148.355 | $-107.704 | $-112.978 |
| Net Change in Short Term Investment | $-0.52 | $1.585 | $-22.883 |
| Investing Activities | $4.65 | $1.022 | $3.757 |
| Cash Flow From Investing Activities | $-144.225 | $-105.097 | $-132.104 |
| Net Long-Term Debt | $-250 | $-391.084 | - |
| Net Current Debt | - | $-0.969 | $0.969 |
| Net Common Equity Issued/Repurchased | $27.75 | $12.131 | $0.064 |
| Financial Activities - Other | $-38.389 | $-22.152 | $-6.875 |
| Cash Flow from Financial Activities | $-260.639 | $-402.074 | $-5.842 |
| Net Cash Flow | $29.873 | $-30.819 | $132.153 |
| 2022-31-12 | 2021-31-12 | 202-31-12 | |
|---|---|---|---|
| Current Ratio | 2.3 | 1.8 | 1.8 |
| Long Term Debt/Capital | 0.53 | 0.62 | 0.82 |
| Debt Equity Ratio | 1.12 | 1.64 | 4.68 |
| Gross Margin | 45.66 | 48.13 | 48.89 |
| Operating Margin | 12.43 | 13.38 | 8.17 |
| ROI | 9 | 21.8 | 3.6 |
| 2022 | 2021 | 2020 | |
|---|---|---|---|
| Price/Sales | 1.11 | 1.45 | 1.37 |
| Price/Earning | 10.68 | 9.41 | - |
| Price/Cash Flow | 13.82 | 16.1 | 23.22 |
Mattel Stock Forecast:
Average 12 Month stock price is $25.29 which pride its an increase of 18.62%, the lowest target is $23 and the highest is $28, on average Mattel is rated as a strong buy.
Revenue is expected to be 5.4bn - 5.7bn - 6.1bn in a low - average - high forecast for 2024.
| forecast for 2024 | High | Low | Average |
|---|---|---|---|
| Stock price | $28 | $23 | $25.29 |
| Revenue | $6.1bn | $5.7bn | $5.4bn |
| Sales growth | 4.5% | ||
| EPS trend | 1.48 |
Industry AnalysisEdit
The toy and games market size was estimated at $308.21bn in 2022 and is expected to grow at an annual compound growth rate of 4.5% from 2023-2030.
Reasons for expansion are due to parents' increased interest in sustainable toys, a revival of conventional toys, awareness of the cognitive benefits of building toys and the rising popularity of mobile based gaming.
Globalisation has allowed for manufacturers and companies to sell their products on a variety of e-commerce platforms like Amazon and eBay leading to a reduction in distribution and operational costs although many consumers still prefer an in-store experience.
Barbie generates 73% of sales within the doll industry and the demand is driven by not only children but also collectors.
Electronic games dominates the market with a revenue share of 63.35% in 2022 which may be something that Mattel investigates in the future as this market is seeing exponential growth.
The Asia Pacific market is the region where demand for toys is the highest with the region accounting for 41% share of revenue.
SWOTEdit
Strengths: established business, strong portfolio, international presence, household names, products sold in more than 150 countries, strong marketing - 2023 Barbie movie $150mn on marketing and generated over $162mn gross in opening weekend
Weaknesses: 2007 toxic toy scandals - evidence of lead paint containing harmful substances - heavy call backs, fine and reputation damage, large workforce - high costs
Opportunities: growing population - growing market - growing demand, establish operations in developing countries to lower costs, differentiate into different markets - Barbie movie was able to reach a larger more mature audience
Threats: Technology, change in taste, cheaper dupes and imitation of products, high competition
Management and Corporate GovernanceEdit
CEO: Ynon Kreiz since 2018, has led a multi-year transformation strategy, significant improvements under his leadership, ESG established, recognised achievements for having a healthy workplace culture by Forbes and Time, 14 live action movies announced, very experienced - was previously CEO of Marker Studios which was acquired by Disney in 2014, prior to Market Studios he was CEO of the Endemol Group
CFO: Anthony DiSilvestro since 2020. Mr. DiSilvestro oversees the company's Optimizing for Growth program to increase productivity and improve efficiency with targeted savings of $250 million by 2023. Mr. DiSilvestro had nearly four decades of finance and leadership experience, most recently as Senior Vice President and Chief Financial Officer of Campbell Soup Company, a role he held from 2014 to 2019. In this position, he helped drive a return to growth and oversaw a successful transformation of the Campbell’s cost structure.
Executive Producer, Mattel Films: Robbie Brenner since 2018, responsible for creating full-length feature films based on Mattel’s iconic portfolio of brands in partnership with major studios, to be distributed globally in movie theaters and on streaming platforms. Ms. Brenner has over 20 years of experience in the film industry. In 2013 she produced “Dallas Buyers Club,” which earned her a nomination for the Academy Award for Best Picture.
COO: Richard Dickson since 2000, Mr. Dickson leads Mattel’s portfolio of global brands, overseeing innovation strategy, design and development, and brand marketing. Mr. Dickson also oversees franchise management, which includes licensing and merchandising, episodic content, live events, and digital gaming. ompany developed and launched the Mattel Playbook, a brand-building approach that has been instrumental in driving the turnaround and growth of Mattel’s Power Brands. In 2022, Barbie was the #1 doll property globally, Hot Wheels was the #1 vehicle property globally, and Fisher-Price was the #1 Infant, Toddler, and Preschool property globally, per The NPD Group.*
Mattel utilises strong and effective corporate governance to ensure they maintain accountability and support their stakeholders with accurate information and rights which include a comprehensive set of bylaws and a code of conduct.
Risks and ChallengesEdit
Product Safety Issues: Mattel has faces issues related to call backs in the past but it has since bounced back from this issue by maintaining strong communications and having a generous compensation program Supply Chain Disruption: increasing raw material and labour costs have led to Mattel having to increase their prices. Some retailers are struggling with their inventory leading to cut backs on toy orders
Changing Regulatory Environments: The toy industry is subject to numerous regulations, especially concerning product safety, labeling, and environmental standards. As regulations evolve or change in different countries and regions, Mattel must stay up-to-date and adapt its manufacturing processes and product designs accordingly. Non-compliance with regulatory requirements could result in fines, recalls, or even legal action.
Economic Factors: Economic fluctuations, inflation, or currency exchange rate changes can impact consumer spending on discretionary items like toys. During economic downturns, consumers may cut back on non-essential purchases, affecting Mattel's sales and revenue.
Sustainability and Environmental Concerns: As consumer awareness of environmental issues increases, companies like Mattel are under pressure to improve sustainability practices. Consumers may favor eco-friendly and responsibly sourced products, and failure to meet these expectations can result in reputational damage.
Historically Mattel has shown a mixed ability to adapt to changes including declining sales and changed in consumer preferences. They've made efforts to adapt by focusing on product innovation, expansion of product portfolio and leveraging popular franchises and licenses to attract customers. Mattel has shown interest in exploring digital initiatives to stay relevant in a tech driven world like digital gaming and films.