Mattel, the world's largest toymaker known for "Barbie," recently reported weak results. Mattel said it would expand its business beyond traditional toys into entertainment, but investor skepticism remains.
On the 12th (local time), the Financial Times (FT) in the U.K. said, "Mattel may be the company that makes some of the world's best-known toys, but its shares are currently being tossed around like a rag doll," adding, "Chief Executive Officer Ynon Kreiz wants to transform the company from a simple toy manufacturer into corporations that build a brand ecosystem, but investors are not buying into his plan."
On the 10th, Mattel said fourth-quarter revenue last year rose about 7% from a year earlier to $1.77 billion (about 2.6 trillion won). But that fell well short of Wall Street's estimate of $1.84 billion (about 2.7 trillion won). Fourth-quarter net income was $106.2 million (about 153.4 billion won), down 25% from a year earlier ($140.9 million). After the news, Mattel's share price plunged as much as 28% in a day.
Mattel's slump drew even more attention as it contrasted with strong results from rival Hasbro, known for "Transformers" toys. The same day, Hasbro said fourth-quarter revenue rose 31% from a year earlier to $1.436 billion (about 2 trillion won). Hasbro said that despite higher toy prices due to tariff hikes, consumers were willing to pay more during the holiday season, helping deliver the results.
As the traditional toy industry shrinks, Mattel is seen as having been slower to respond in digital than Hasbro, which expanded its gaming business early by leveraging its character intellectual property (IP). Keegan Cox, an analyst at investment bank DA Davidson, said, "Mattel is making early-stage investments similar to what Hasbro invested in the gaming industry seven years ago."
Mattel was not entirely unprepared for the digital age. Mattel leveraged its flagship IP, Barbie, to produce the film "Barbie" with Warner Bros. But even though the film ranked among the biggest successes in Warner Bros. history, it reportedly contributed only about $100 million to Mattel's operating profit that year. Because the movie was made primarily for adult audiences, analysts said it did not sufficiently translate into increased Barbie doll sales.
Mattel plans to stage a rebound by expanding content production based on its existing toy IP. In June, it is set to release the live-action film "Masters of the Universe," adapted from the popular "He-Man" toy line, and in Oct., it plans to unveil "Matchbox: The Movie." It also plans to strengthen its mobile gaming business by fully acquiring the mobile game studio "Mattel163," which had been operated as a joint venture with NetEase, Inc. The amount Mattel will invest this year to bolster its digital gaming business is $150 million (about 220 billion won), about a quarter of last year's operating profit.
Kreiz, the CEO, has emphasized that such content investments will contribute positively to next year's results. However, FT noted that the fact Mattel's market capitalization fell by as much as $1.5 billion (about 2.2 trillion won) after the earnings release—10 times the content investment—suggests shareholders' judgment may differ from his outlook.
Reuters said, "Both companies face weakening demand for traditional toys, but for Hasbro, success in the digital game institutional sector fundamentally changed its risk profile, turning a bleak outlook into a temporary shock," adding, "Mattel, by contrast, saw its stock tumble on macroeconomic warnings alone. The divergent share-price moves show the strategic gap between the two giant toy corporations is widening."