Mattel CEO out as shares slide

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Aerial view of Mattel's HQ
Mattel’s Headquarters

The iconic manufacturing house behind Barbie dolls and Fisher Price toys is going through a tough time recently. Over the past three years, Mattel (NASDAQ:MAT) has seen its market share of the lucrative American doll and doll accessories market fall dramatically. In the space of six years, Mattel’s share of this market fell from more than 25% to around 19%. Considering the huge volumes involve, this has been a tremendous reversal of fortune for Mattel as it seeks to figure out the changing tastes of its target market for Barbie dolls. Young girls’ tastes have changed. Instead of reaching out for Barbie dolls, young girls now prefer electronic gadgets like tablets and electronic watches. If they are to buy dolls, they would prefer dolls based on the Walt Disney movie, Frozen.

Times have definitely changed for Mattel and its finances reflect this ongoing sea change in consumer taste. Mattel has warned that its sales fell by 6% during the past holiday quarter. Due to its continuing underperformance, Mattel has let go of its CEO, Bryan Stockton. Mr Stockton has been the CEO of Mattel since January 2012 and was promoted to Chairman in 2013. The new permanent CEO of Mattel, which is yet to be determined has his or her work cut out for him.
Mattel is under a lot of pressure to figure out consumer taste and figure it out quickly. It has to move decisively. It wouldn’t be a surprise if Mattel goes through restructuring and possible cost-cutting measures. The toy industry is obviously driven by consumer taste and it appears that Mattel has been a buck short and a day late figuring out the changing consumer preferences. It can’t afford to see its market share erode any further. Expect dramatic changes to its lineup in the coming quarters.

 

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