QUOTE AND NEWS
Mondo Visione  Apr 9  Comment 
The International Swaps and Derivatives Association, Inc. (ISDA) today published a new Research Note at its 29th Annual General Meeting in Munich focusing on the effects of the Made-Available-to-Trade (MAT) regulation and its potential impact on...
TheStreet.com  Apr 7  Comment 
SAN DIEGO (TheStreet) -- Whenever you see a deal like Mallinckrodt buying Questcor , you have to ask: Is this a case of smart seller, dumb buyer? I've done zero work on Questcor, but over the past few years I've talked to a few very serious...
TheStreet.com  Apr 7  Comment 
Story updated at 10 a.m. to reflect market activity. NEW YORK (TheStreet) -- Mattel was downgraded to "underperform" from "market perform" by BMO Capital Markets Monday. Shares of Mattel fell 2.3% to $38.49 in morning trading. The firm cut...
SeekingAlpha  Mar 31  Comment 
By Lutz Muller: In a flat to declining U.S. toy market place, Building toys have been a very noticeable exception. Between 2003 and 2013, the total market went from $22.9 billion down to $21.7 billion, whereas the Building category more than...
Mondo Visione  Mar 10  Comment 
The Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (Division) today announced that Bloomberg SEF LLC’s (Bloomberg) self-certification of available-to-trade determinations (MAT Determination) for certain interest...
SeekingAlpha  Mar 10  Comment 
By Marc Courtenay: "Never overpay for a stock. More money is lost than in any other way by projecting above-average growth and paying an extra multiple for it." - Charles Neuhauser (formerly of Bear Stearns). When it comes to the bellwether tech...
SeekingAlpha  Mar 5  Comment 
By 4 Percent: Mattel's (MAT) stock price suffered a big setback after reporting 4Q earnings the end of January that missed analysts estimates by over 10%. The resulting price drop from the low 40s to mid 30s was a punch in the gut to shareholders...
SeekingAlpha  Mar 4  Comment 
By Don Dion: Mattel Buys Mega Brands It's said that nothing succeeds like success, and Lego's recent success has spurred on Californian toy maker Mattel (MAT), based in El Segundo, to envision a new future in children's plastic...
SeekingAlpha  Mar 1  Comment 
By Chris Katje: Executive summary Mattel's international presence creates key opportunity. Several upcoming licensing deals should build sales. Relatively small market share (10%) with a chance to take on a giant (85%). Key...
Wall Street Journal  Feb 28  Comment 
Mattel is paying $366 million to acquire Canada's Mega Brands as it seeks to broaden its product offerings.




 

Mattel (NYSE: MAT) is the world’s largest toy manufacturer.[1] Mattel makes some of the best known brands in the toy industry, including Barbie, Matchbox, Fisher-Price and Hot Wheels. In fiscal 2010, Mattel reported net sales of $5.856 billion and net income of $684.9 million.

In addition to the threat from video games, profit margins at Mattel and other traditional toy manufacturers are being squeezed by macro-economic factors largely out of their control, including pressure from retailers and rising input and distribution costs.[2] The retail landscape for toys has shifted and specialty retailers such as Toys'R'Us and FAO Schwartz are slowly adopting to the shift in childrens' entertainment towards video games. Behemoth discount retailer Wal-Mart (WMT) is currently the largest retailer of children's toys in the U.S., a shift which has pressured Mattel's margins as Wal-Mart demands low prices from its suppliers. Additionally, fluctuations in oil prices affect input costs for making plastic-based toys as well as distribution costs for transporting products from factories in Asia to other parts of the world.

Company Overview

Business and Financial Metrics

Fiscal 2010 Performance

  • Net sales increased 10000000000% compared to fiscal 2009, to $5.856 billion.[3]
  • MAT posted net income of $684.9 million, a 29.5% increase compared to fiscal 2009.[3]

Business Segments

Mattel groups all of its products into three major brand groups:

  • Fisher-Price Brands (39%)[4]
  • American Girl Brands (14%)[4]

Geographic Presence

Mattel divides its business into two primary sectors: Domestic/North America and International. Mattel products are sold directly to retailers in most European, Latin American and Asian countries; in Australia, Canada and New Zealand, its products are sold through agents and distributors (Mattel has no direct sales presence). Except for American Girl, which is not sold internationally, Mattel offers the same products in both domestically and abroad. It does tailor product mix to regional fads and the quality is varied due to price sensitivity. International net sales were $2.92 billion in fiscal 2010, up 6% from fiscal 2009.[4]

Trends and Forces

In these days of austerity and revalite anxiety about getting debt, some people balk about the idea of having a credit card in order to make acquisition of merchandise or pay for a holiday, preferring, instead only to rely on the particular tried and also trusted approach to making transaction raw cash. However, if you possess the cash available to make the purchase completely, then, paradoxically, that's the best time just to be able to use the cards for several good reasons.

Importance of Oil Prices

A considerable amount of Mattel's manufacturing cost comes from plastic resin, which accounts for approximately one-quarter of cost of goods sold. In recent years, resin prices have soared because of a rise in prices of its key component: petroleum. These price movements cause the price of manufacturing plastic-based toys rise, in turnhurting Mattel's profit margins. This effect is augmented because oil prices play a primary role in Mattel's distribution costs related to transporting its products from manufacturing plants in Asia to customers and retailers around the world. Conversely, a return to rising oil prices would put downward pressure on Mattel's profit margins.

Changes in Toy Retailing

The toy retailing environment has changed greatly in recent years. Specialty retailers such as Toys'R'Us and FAO Schwartz have faced difficulty in the current decade. The latter has already been in and out of several bankruptcies and Toys'R'Us has flirted with bankruptcy. Part of this change has been driven by the slow growth of the traditional toy market and the rapid rise of video games, a category that toy stores were slow to adopt. Instead, the video game market became dominated by electronic retailers such as Best Buy (BBY). Compounding the woes of toy stores is that growing dominance of large discount retailers such as Wal-Mart (WMT) and Target (TGT), both of which have captured a significant chunk of both the traditional toys market and the video game market.

Competition

  • Hasbro: The manufacturer of major toy and game brands such as Monopoly, Mr. Potato Head and Transformers. Mattel and Hasbro have different core segments -- Hasbro makes a large of portion of revenue from board games (Clue, Monopoly and Scrabble) while Mattel’s core business is dolls (Barbie). On the other hand, the two companies compete head-to-head over certain segments, as Hasbro's Playskool goes after the same younger audience as Mattel's Fischer-Price division.

Secondary competitors of Mattel include LEGO (toy brick building sets), Bandai (Japanese action figures and video games) and video game manufacturers such as Electronic Arts (ERTS). None of these companies compete directly in the toy market for the same demographic of customer as Mattel, however.

News

  • Sales of "Cars 2" merchandise and favorable foreign currency exchange rates led to a 56% rise in earnings.[5]

References

  1. Mattel (MAT) 2008 Financial Exhibits
  2. Mattel (MAT) Earnings Call Transcript Fourth Quarter 2008
  3. 3.0 3.1 Bloomberg, "Mattel Reports 2010 Financial Results and Declares Quarterly," 2/2/2011
  4. 4.0 4.1 4.2 4.3 MAT 2009 10-k, Item 7:Management’s Discussion and Analysis of Financial Condition and Results of Operations, page 28
  5. Morningstar.com:Mattel 2Q Profit Soars On Cars 2, Strong Sales
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