Can Mattel Catch Up to Hasbro? (MAT,HAS) – Investopedia

After a disastrous fourth-quarter earnings report, investors are looking at how beaten-down toy maker Mattel Inc. (MAT) stacks up against its rival Hasbro Inc. (HAS).

The El Segundo, Calif.-based toy maker saw its shares plummet nearly 18% after it reported weaker-than-expected Q4 earnings, in which revenue declined 5% year over year (YOY). While former Chief Executive and current executive chairman Christopher Sinclair blamed the slowdown on industrywide challenges, in the same quarter, Hasbro posted worldwide sales up 11%. The Pawtucket, R.I.-based company outran its competition by transforming into something greater than a toy business, rather, a firm determined to create “play experiences.” (See also: Toy Co. Earnings: Hasbro vs. Mattel.)

Focused on Tech Innovation

In January, Mattel appointed a new CEO, Margaret Georgiadis, a former Google executive who is expected to focus on technological innovation as a means to sustainable growth, meet new consumer demands and catch up to its competition.

Before Georgiadis, it seems as though Mattel had been reluctant to jump on the innovation train, instead focusing on reviving declining businesses and pursuing dead-end markets. For example, take Mattel’s Barbie doll, launched this week in 1959. Once one of America’s most popular toys, Barbie sales have been on the decline for years. As Barbie turns 58, analysts say it may just be time for her to retire. The company has failed to transform the doll in order to boost sales, despite a revamp of the toy line with new body shapes and skin tones. Closely following the rebrand, Barbie sales declined 3.4% in the first quarter of 2016. In Mattel’s most recent fourth-quarter earnings report, Barbie sales fell another 2% in North America.

Ultimately, Mattel’s momentum will rely on the speed it can execute its tech expansion. New partnerships such as a deal with Alibaba Group Holding Ltd. (BABA) to develop educational and interactive toys, show the firm is making strides in this direction.

Comments

Write a Reply or Comment:

Your email address will not be published.*