Mattel CEO: Extended our leadership in key toy categories with significant share gain in 2023

Mattel set to hold a virtual investor Day event that's happening today shareholders are eager to hear the company's outlook for the toy industry and uh anything about the American Girl and Fisher Price Brands which an activist investor said last month should be candidates for a sale joining us right now is enan K chairman and CEO of Mattel we should also say I think Barbie is having a big birthday on on Saturday of this week right enan yes Andrew great to see you again and uh it was a big year f

or Matel uh 2023 was really a milestone moment for the company uh not only we had this incredible success with the Barbie movie we also extended our leadership in key toy categories with significant share gain in overall strength in our financial position in fact we achieved the strongest balance sheet we've had in years uh currently at investment grade rating um and uh $700 million free cash flow generation more than two and a half times of the prior year uh you also know that we recently annou

nced a$1 billion sh rep purchase program and believe we're an excellent position to continue to execute our strategy so enan explain this then uh barington Capital as I just said at the top of this uh sent you a letter I believe on March on February 1st uh suggesting that you sell the American Girl franchise that you sell a Fisher Price um I think that they are happy with certain things that are happening in the business bus but less happy with other things uh Revenue uh beating expectations ear

nings were below expectations how do you respond to that letter what did you think when you first read that letter well without commenting specifically on any uh letter uh I can tell you that we always welcome shareholder feedback and engage with our investors as a company as a leadership team as a management team we always evaluate our portfolio and position the company for long-term growth as it relates to uh fishy price and American Girl both are very stored Brands American Girl is a valid as

set within a Mattel portfolio with significant fan base and great product we continue to optimize the retail footprint and consumer Omni Channel experience we saw sales Trend improving in the fourth quarter we open a new Boutique in Dallas in a flagship store in La we saw all three Flagship stores achieve same store sales growth for the year we announced a new American girl movie in partnership with Paramount we um uh announc another collaboration with Disney Princess and Frozen and we're lookin

g to move American Girl headquarter to Los Angeles to leverage our director consumer capabilities and drive the man and really benefit from this incredible expertise we have within the dolls category speak to I mean look the my my daughter is is an American girl uh afficionado we've got a lot lot of American Girl dollars in our in our home but how important is that franchise for you clearly you're investing in it um and what is therefore then misunderstood to the extent it is misunderstood in th

e marketplace around American Girl also Fisher Price and and and and and as it related to all of this is how important are all the franchises to each other to your ability to sell through various channels meaning how easy is it for you to take one brand if you decided to sell it uh to do so and does that therefore impact other distribution deals well you're asking the right question because we manage a portfolio and within a portfolio inevitably there will be puts and takes but the idea is that

we are leveraging our capabilities in dolls vehicles and infant total preschool where we are a global leader and managing a portfolio Within These categories gives us scale and uh true expertise and capabilities to benefit from our size and and demand creation capabilities supply chain and a global commercial um infrastructure that is second to n in the industry the take it's also fair to say that both American Girl and fish price have been declining and have been uh performing uh relatively uh

not as well as Barbie Hot Wheels for example and other brands and as it relates to fish at Price It's a good example because when you look inside the category which has been declining Fisher Price score which is by far the largest part of the category has been stable over the last 6 years we have been proactively exiting underperforming parts of the business a low margin business which uh drove much of the decline and we believe we are positioning the brand and the category as a whole to grow an

d improve profitability and we'll talk about it in more detail today at our investor presentation but the point is we are very proactively managing our portfolio and believe we have the capabilities the scale and the expertise to achieve long-term growth and margin Improvement right real quick just just speak to the the strength of the consumer right now and also margins and and how and how how are you being attacked by margins by some of the online retailers who are selling some of these produc

ts at very low margins relative to what you're seeing in the stores and how does that play for you yeah for Matel we've been improving our margin we actually had a so margin Improvement and expect to continue to do that in 2024 and 20 20 2025 so we are continuing to managing our balance sheet and our profit U uh uh uh Prof profitability profile to continue to drive long-term growth the industry the industry declined 4% in 2023 sorry 7 % in 2023 but it's after a record growth between 2019 and 202

2 25% growth between 2019 and 20 uh uh and 2022 we did see decline but it's still 177% higher than pre pandemic in 2019 so the industry is healthy not withstanding the decline we expect it to return to growth uh in 2025 and continue to grow thereafter