Mattel Unveils Plan to Reinvent Company and Deliver Enhanced and Sustainable Growth

EL SEGUNDO, Calif., June 14, 2017 /PRNewswire/ -- Mattel, Inc. (NASDAQ: MAT) today unveiled its strategic growth plan during the company's Investor Day event in New York City. Chief Executive Officer Margo Georgiadis and members of the management team presented the strategic plan, a roadmap for achieving growth, as well as the company's medium-term financial framework.

At the Investor Day, Mattel outlined its new strategic direction underpinned by the company's investment thesis:

• The industry continues to grow, with shifting consumer and market trends that are reshaping the future.
• Mattel possesses differentiated and market-leading assets that position it to capitalize on future opportunity.
• Mattel's clear strategy for growth is focused on: building its Power Brands (American Girl®, Barbie®, Fisher-Price®, Hot Wheels® and Thomas & Friends™) into 360-degree connected systems of play and experiences; accelerating growth in emerging markets; and transforming its innovation pipeline.
• This strategic repositioning will enhance long-term growth and profitability.
• Management anticipates that reshaping operations and reallocating resources will unlock substantial reinvestment funds for growth, and will improve speed to market.
• Mattel's large base of consistent revenue from core brands will continue to produce robust ongoing cash flow; and the company will maintain a strong balance sheet to support its growth strategy.

"Our vision is to inspire the wonder of childhood as the global leader in learning and development through play. As we shift our business aggressively in a new strategic direction and transform how we operate, I believe we have the assets to achieve this vision and shape the future of the toy industry," said Margo Georgiadis, CEO of Mattel. "The strength of the underlying Mattel franchise supported by important trends such as a growing global toy market and an increasingly digital, mobile-first world provides an opportunity for Mattel to create significant long-term value for our investors." 

A Future-Proofed Long-Term Strategic Framework

Mattel will focus on a five-pillar strategy:

1. Build Mattel's Power Brands into connected 360-degree play systems and experiences.
2. Accelerate emerging markets growth with digital-first solutions.
3. Focus and strengthen its innovation pipeline.
4. Reshape Mattel's operations to enable the strategy – leaner, faster, smarter.
5. Reignite Mattel's culture and team.

1)     Build Mattel's Power Brands into Connected 360-degree Play Systems and Experiences

Building Mattel's Power Brands into connected 360-degree play systems and experiences starts with the consumer and creates purposeful worlds of play. The company has created a brand development framework to unlock the scale and profitability of its brands.

• The framework is based on Mattel's beloved and purposeful global brands, which are aligned to the skills that kids need to succeed.
• Each one of these brands is uniquely founded on a globally relevant and accessible play pattern – dolls, cars and trains – which are sold at huge unit volumes, in the hundreds of millions.
• The framework extends those brands into systems of play, both physical and digital.
• Leveraging Mattel's scaled consumer base, the framework then builds powerful communities of shared interest around the brand.
• Further growth will be driven by meaningful adjacent opportunities that extend Mattel's Power Brands and complete the 360-degree experience, including Consumer Products, Gaming, Content and Live Experiences.

Mattel is already moving quickly on this path by continuing to expand its brands' physical play systems. Mattel plans to bring new scaled, digitally connected toy offerings to market starting in fall 2018.

2)     Accelerate Mattel's Emerging Markets Growth with Digital-First Solutions

Mattel plans to accelerate growth in emerging markets, which is expected to be the biggest driver of future industry growth. The toy market in these regions is still emerging with spend per child a fraction of the U.S. 

Mattel's purposeful brands are well aligned with the needs of Chinese parents, and Mattel has taken a solutions-based and digital-first approach to localize products, which has enabled the company to scale rapidly over the past five years. This success, along with Mattel's rich learning and development curriculum, has earned the company ground-breaking partnerships that will support accelerated growth. Mattel predicts that its China business can be 3 to 4 times bigger by 2020 if well-executed. In addition, the company has plans to take a similar approach to expand more rapidly in other priority emerging markets, including India and Indonesia.

3)     Focus and Strengthen Mattel's Product Innovation Pipeline

To focus and strengthen its product innovation pipeline, the company is shifting to a company-wide approach to manage its innovation portfolio – and eliminating siloes across brands, categories and partners. This includes aligning metrics and investment levels with the respective opportunities and encouraging more aligned risk-taking across initiatives. As a result of this, the company expects to speed up its innovation cycle time – targeting 6 to 9 month cycles to develop new products, versus 18 months today.

The company will drive growth within its innovation pipeline in three key areas:

• Further differentiating its offering for licensed partners, which leverage Mattel's infrastructure and provide excitement at retail.
• Pursuing co-production with partners that align on shared interest.
• Driving innovation with Mattel's own brands and launching new brands by leveraging the company's deep insights and expertise in girls, vehicle play, games and STEAM.

4)     Reshape Operations to Enable Mattel's Strategy 

To enable the company strategy, Mattel plans to reshape its operations to be faster, leaner and smarter. As a part of this, the goal expects to free up $150-$200 million to reinvest in rearchitecting the company. Changes will focus on three areas:

• Commercial – simplifying the organization and better aligning to market opportunities, as well as supporting a transformation to the omnichannel world.
• Manufacturing and supply chain – improving speed to market, deepening cost advantage and creating scalable digital product platforms.
• IT transformation – optimizing critical business drivers with shared data and an insights-driven approach across all areas of the business.

5)     Ignite Mattel's Culture and Team

To reignite the culture, Mattel has launched a new purpose, promise and values that will help to unleash the innovation, collaboration and speed the company needs to succeed. In addition, the company has hired and will continue to hire strategic talent to seed change across the organization and accelerate its progress forward.

Mattel has already added a suite of talent across the organization in areas including brand management, commercial, manufacturing, connected product development, ecommerce, content and digital market. This will continue to be a priority going forward.

Investment Strategy / Capital Allocation
To drive growth and margin improvement, Mattel will be making incremental investments. The company expects the cumulative incremental investment to execute this strategy in both capital expenditures and operating expenditures will be approximately $250 to $350 million.

The company will right-size its dividend to free-up resources for reinvestment as well as strengthen its balance sheet and provide added financial and strategic flexibility.

Medium-Term Financial Outlook
In the medium-term, Mattel believes its future-state business model can achieve mid-to-high single digit revenue growth and operating profits at, or above, 15%.

Webcast
An archive of the Investor Day webcast is available on Mattel's Investor Relations website, http://investor.shareholder.com/mattel.

Forward-Looking Statements
This press release contains forward-looking statements on a variety of matters. These forward-looking statements are based on currently available operating, financial, economic and other information, and are subject to a number of significant risks and uncertainties. A variety of factors, many of which are beyond our control, could cause actual future results to differ materially from those projected in the forward-looking statements. Some of these factors are described in the Company's periodic filings with the Securities and Exchange Commission, including the "Risk Factors" section of Mattel's Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and Mattel's Quarterly Reports on Form 10-Q for fiscal year 2017, as well as in Mattel's other public statements. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so.

This press release and our Investor Day slide presentation are available on Mattel's Investor Relations website, http://investor.shareholder.com/mattel, under the subheading "Events & Presentations."

About Mattel
Mattel is a creations company that inspires the wonder of childhood. Our mission is to be the recognized leader in play, learning and development worldwide. Mattel's portfolio of global consumer brands includes American Girl®, Barbie®, Fisher-Price®, Hot Wheels®, Monster High® and Thomas & Friends™, among many others. Mattel also creates a wealth of lines and products made in collaboration with leading entertainment and technology companies. With a global workforce of approximately 32,000 people, Mattel operates in 40 countries and territories and sells products in more than 150 nations. Visit us online at www.mattel.com.

MAT-FIN MAT-CORP

SOURCE Mattel, Inc.

Related Links

http://www.mattel.com