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Is the struggle over for Mattel?

There was a time when Mattel was a household name. With brands like Barbie, Hot Wheels, and Fisher-Price, Mattel was once recognized as the largest toy maker in the world.  But the toy monster eventually lost that title to Lego, a privately owned company, with the highest brand value.

Mattel is slowly sinking for years now because today’s tech-savvy kids are less inclined towards Mattel’s traditional toys. Tough environment for Mattel to survive as it is losing a large chunk of the market share to companies like Lego and Hasbro. Plus the sluggish performance of its key brands added to the weak performance of the company.

Despite the drop in the demand for its iconic toy Barbie, Mattel in no way was going to kill the goose that laid golden eggs. The company worked on innovating Barbie to make it more relevant to their audience. And now just in time for International Women’s Day, the company introduced a new set of Barbie dolls based on 17 female global role models.

Mattel is grappling with problems both internally and externally. Apart from declining sales for years, the company had to put up with issues such as a change in management, loss of market share, and loss of Disney’s Princess license to its longtime rival Hasbro.  All these ongoing problems soon made Mattel a subject of acquisition. There was news that Hasbro was interested in acquiring Mattel, though no concrete talks surfaced.

The company’s growth prospects are further diminished as its largest distribution partner Toys “R” Us filed for bankruptcy last year. This left a dent in the company’s sales that were already witnessing a downfall. Even though its rival Hasbro experiences the impact of Toys “R” Us bankruptcy, the pressure on Mattel is even more since it has rolled out several new toys, increasing the complexity of supply chain.

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To keep the sales flattish this year, the company sees cost-cutting as an effective strategy. The company has chalked a $650 million cost savings plan. This includes job cuts, shutting down of the non-profitable brands, with most of it being implemented this year.

Mattel’s struggles continue. But initiatives like cost-cutting and closing of non-performing outlets may help Mattel bounce back. It could help the company stabilize its sales and eventually gain momentum.

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