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Mattel Inc MAT

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Morningstar’s Analysis

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Prior Efforts to Remedy Product Line Up Pay-Off for Mattel in Healthy Holiday Sales and Profits

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

Narrow-moat Mattel continues to benefit from both pandemic-related demand and past efforts to rectify the organizational structure. Thanks to more homebound kids, Mattel grew fourth-quarter sales by 10%, to $1.6 billion. Worldwide sales of dolls rose 13%, vehicles were up 11%, and the long struggling infant, toddler, and preschool segment ticked up 6%. And global strength was pervasive (except for Latin America), with North America sales rising 13%, EMEA up 14%, and Asia Pacific 12% higher. These top line gains helped accrue cost benefits, with the adjusted gross margin expanding 250 basis points (to 51.4%) and selling and administrative, or S&A, costs contracting more than 400 basis points (to 21.7%), leading to an adjusted operating margin of 12.6% (the best fourth-quarter metric since 2016). However, guidance implies slowing sales in 2021, with just a mid-single-digit sales growth rate projected, modestly ahead of the 3% we model, which could cede some cost leverage.

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Company Profile

Business Description

Mattel markets toy products that are sold to its wholesale customers and direct to retail consumers. The company offers products for children and families, including toys for infants and preschoolers, girls and boys, youth electronics, handheld and other games, puzzles, educational toys, media-driven products, and plush and fashion-related toys. Mattel's owned portfolio includes Barbie, Hot Wheels, Fisher-Price, Thomas & Friends, and American Girl. In addition, it currently manufactures toy products for its segments both internally and externally (through outside manufacturers).

Contact
333 Continental Boulevard
El Segundo, CA, 90245-5012
T +1 310 252-2000
Sector Consumer Cyclical
Industry Leisure
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 32,100

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