Mattel CEO Responds to Activist Investor Seeking Toy Line Changes

After the Barbie Oscar snubs for Margot Robbie and Greta Gerwig, Mattel has been getting negative reviews from activist investor Barington Capital.

Barbie may have earned a $1.4 billion dollars at the worldwide box office. But Barington in a recent letter to Mattel advised the toy maker to fix or sell off its American Girl and Fisher-Price brands as part of possible strategic alternatives to raise its share price.

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“Mattel’s Fisher-Price and American Girl segments have witnessed dramatic and consistent revenue declines over a multi-year period,” the activist investor wrote to the toy maker. After unveiling his company’s fourth quarter results, Mattel CEO Ynon Kreiz told media analysts the Fischer-Price and American Girl properties remained valuable toy brands that the company would continue to invest in.

“We believe we have a very strong portfolio, we always evaluate our portfolio to position the company for growth in line with our strategy to create long term shareholder value,” Kreiz said in response to an analyst question about the Barington Capital letter.

Mattel CFO Anthony DiSilvestro told analysts that, starting in the first quarter of 2024, the toy maker’s American Girl business would be “integrated into its North America commercial organization. As a result, American Girl will no longer be an operating segment.”

Kreiz followed that up by insisting the American Girl toy line “is a value asset within our portfolio with a significant fan base and a really, really good product.” The Mattel CEO did not indicate whether his company had formally responded to the Barington Capital overture, and how.

Kreiz during the call also argued the box office success for Barbie underscored his company’s successful movie adaptation strategy for its toy lines. “The breakout success of the award-winning Barbie movie was a showcase for our entertainment strategy and the relevance of our brands outside the toy aisle,” he argued.

Mattel participates in the success of Barbie as the rights owner and a producer, with the company’s profit participation scaling with the success of the Warner Bros. tentpole. CFO DiSilvestro told analysts Mattel has received $150 million in gross billings as part of its direct movie participation in Barbie, which includes sales of toys and consumer products.

Investors are also keen to know how Mattel will follow up on the Barbie box office success with upcoming films based on the toy maker’s IP. That includes J.J. Abrams Hot Wheels film, a Matchbox car film from Skydance, a Major Matt Mason film starring Tom Hanks, Polly Pocket, developed by Lena Dunham and starring Lily Collins, Barney, in development with Daniel Kaluuya, and a Rock ‘Em Sock ‘Em Robots movie with Vin Diesel.

Kreiz warned investors on the analyst call that the toy industry would “decline” in 2024, though at a lesser pace than 2023. “The anticipated decline is due to a lighter theatrical film slate and the impact of a shift in consumer spending patterns towards experiences and services, which we believe will moderate over the year,” he forecast.

Any upside, or downside for that matter, from its box office success is limited in part by Mattel relying on partners to adapt its toy properties as a contributor of IP and a seller of related toys and consumer products, rather than as a key production player.

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