…well, hello, dolly. It’s so nice to have you back where you belong.
(Hello, Dolly lyrics from Warner/Chappell Music)
That must be the sentiment at the corporate offices of Mattel, Inc. (NASDAQ:MAT) as the company recently reported its first-quarter 2013 financial results. The company’s American Girl brand (dolls, books, eBooks, clothes, accessories) led the way for Mattel, Inc. (NASDAQ:MAT), amid weaker performance from some of its other brands.
American Girl gross sales ($100.5 million) increased 32%. Investors should note Mattel’s vision and philosophy for this brand. The focus of American Girl is to provide products and experiences that assist girls in growing up in a wholesome way. This is a mission that’s essentially a counterpoint to much of what young girls are exposed to today.
At the same time, Mattel, Inc. (NASDAQ:MAT)‘s focus with this brand is to help girls (and yes, garner sales & profits for Mattel) while encouraging them to enjoy their all-too-brief time as girls. With a gross-sales increase of 32% for American Girl, do you think parents are listening to the message that Mattel’s promoting with this brand?
Now, what’s ironic for Mattel is that global sales for its
Barbie brand were down 2% in the quarter. Barbie’s taken some heat hotter than the curlers in her hair in the last few years because of her ultra-thin, picture-perfect look that some feel projects a distorted-female image to young girls. It is still a powerful brand, but there are some small chinks in Barbie’s nail polish. Nevertheless, investors can take note that parents are still buying products for their children that are not always of the digital high-tech variety.
Mattel, Inc. (NASDAQ:MAT)‘s worldwide gross sales for its other core brands, Hot Wheels and Fisher-Price, decreased 3% and 7%, respectively.
Mattel’s worldwide gross sales for other girls’ brands were up 56%. The strength of this growth was the company’s Monster High brand. Overall, Mattel’s global net sales increased by 7% ($995.6 million). For investors, the company’s broad product assortment spread across storied as well as new brands has resulted in overall net sales growth – some weaknesses offset by newer brand strength.
On top of all of this, investors can take away that Mattel, Inc. (NASDAQ:MAT)‘s board of directors declared a second quarter 2013
cash dividend of $0.36 per share. This represents an annualized dividend of $1.44 per share.
Seasonality
I like the statement by Mattel Chairman and Chief Executive Officer, Mr. Bryan Stockton, in an April 17 conference call. He said,
…although Easter, overall, is having less impact on our business, as we become more global and penetrate markets where Easter is not a significant toy industry promotion occasion.
Why is this a significant statement for investors considering Mattel, Inc. (NASDAQ:MAT)? It’s significant because the company, while beholden to seasonal sales, is aggressively looking beyond certain times of the year. Yes, the holiday seasons, are, and will continue to be, the bread and butter of enterprises in the consumer-goods sector.
However, Mattel, with its global strategy for growth, is positioning the company for greater “everyday” sales as well, which can help make those sales “valleys” less pronounced.
Competitive landscape
Hasbro, Inc. (NASDAQ:HAS) has also experienced growth in its Girls category, and its international operations in newer markets are manifesting growth as well. Hasbro, like Mattel, sees the potential for even greater growth through innovative initiatives in the Girls category.
Company President and CEO, Mr. Brian Goldner, said in February,
In 2012, we achieved many important objectives for the year, including improving the U.S. and Canada segment operating profit margin to 15.1%, growing our games and girls categories and driving 16% revenue growth in the emerging markets while improving profitability.
