Mattel missed its earnings consensus

Mattel, the world’s largest toy company and is Hasbro’s main rival, had disappointing Q1 results for 2008. 

Mattel is famous for Barbie, Hot Wheels, Fisher-Price and also Justice League.  Just 2 decades ago, it hit the jackpot with He-Man and She-Ra toys.  Last year, it was in the news for massive toy recalls when some of those toys were suspected to have high levels of lead content.  Here is a brief summary of its earnings announcement this week.

“Mattel said it lost $46.6 million, or 13 cents per share, missing analysts’ expectations of a profit of a penny per share. The maker of Barbie dolls and Fisher-Price toys blamed higher product costs and legal fees.”

The full report dated 21 April 2008 can be found here.

Although Mattel generally tends to stick by its “tried and tested” power product line Barbie, the basic Barbie toy line has undergone much innovation in recent years.  New fantasy themed characters and 3-D animation movies have been created as “60-90min commercials” to sell their respective dolls and toys based on Barbie molds.  

Mattel also tied in with Disney to produce the “Disney Princesses” dolls, based on Disney Movies like “Little Mermaid”, ”Beauty and the Beast”, and “Aladdin” etc.

I also collect some toy lines by Mattel.  The She-Ra toy line by Mattel in the 80’s was commendable.  Till today, the She-Ra horses made by Mattel in the 80’s have among the best conformation for toy horses with brushable manes and tails.  A close rival would be the “Grand Champion” horses.  The Justice League action figures that I collect are also by Mattel. 

Looks like in terms of product innovation and variety, Mattel has an edge over Hasbro.  Too bad the former was hit by bad press of massive toy recalls last year.  That also had a great negative impact on overall sales in the toy industry.

As the time passes and dust settles, the toy industry on the whole should be headed to better times as the world population is growing fast.  More countries are becoming better developed, and its people getting more affluent.  The market portential is very vast and there will be enough pie for the biggest and best toy companies to compete for. 

For me, I aim to look beyond toys as collectible items and learn to view the “bigger picture” and how it ‘fits’ in the economy.