Mattel Fourth Quarter, Full Year 2015 Financial Results; Declares Quarterly Dividend
Mattel, Inc., reported worldwide net sales up 7 percent for the fourth quarter 2015 in constant currency, adjusted operating income of $310.5 million, and adjusted earnings per share of $0.67, including discrete tax items. For the year, Mattel reported worldwide net sales up 2 percent in constant currency, adjusted operating income of $640.3 million and adjusted earnings per share of $1.31, including discrete tax items.
“We are encouraged by our results in the quarter and for the year, which reflect solid progress on a number of important fronts,” said Chris Sinclair, Mattel chairman and CEO, in a statement. “We achieved our goal of stabilizing the business, with improved gross sales both in the quarter and for the full year. In addition, we drove significant momentum across the majority of our core brands, most of which saw stronger retail sales and shipping, and we continued to make headway in key emerging markets like China and Russia. Overall, we are pleased with our performance at this stage of our turnaround.”
Financial Overview
Fourth quarter gross sales in the North American Region, which consists of the United States, Canada, and American Girl, increased by 5 percent in constant currency, and 4 percent as reported. In the International Region, gross sales were flat in constant currency, and decreased 14 percent as reported. Adjusted gross margin decreased 20 basis points and 20 basis points as reported, driven primarily by the negative impact from changes in currency exchange rates. Adjusted other selling and administrative expenses decreased $21.3 million, reflecting continued cost improvement initiatives. Adjusted operating income for the quarter was $310.5 million, compared to prior year’s adjusted operating income of $265.1 million, reflecting lower other selling and administrative expenses and continued cost improvement initiatives.
For the year, gross sales in the North American Region increased by 1 percent in constant currency, and 1 percent as reported. In the International Region, gross sales increased by 1 percent in constant currency, and decreased 15 percent as reported. Adjusted gross margin decreased 90 basis points, and 60 basis points as reported, driven primarily by the negative impact from changes in currency exchange rates. Adjusted other selling and administrative expenses decreased $69.3 million, reflecting continued cost improvement initiatives. Adjusted operating income for the year was $640.3 million, compared to prior year’s adjusted operating income of $765.3 million, reflecting the negative impact from changes in currency exchange rates, partially offset by lower other selling and administrative expenses.
Mattel’s debt-to-total capital ratio as of December 31, 2015, was 44.6 percent.
For the year, net cash flows from operating activities were approximately $735 million, compared to approximately $889 million in the prior year. The decrease was primarily driven by reductions in working capital and lower net income. Cash flows used for investing activities were approximately $283 million, a decrease of approximately $426 million versus the prior year, primarily driven by the acquisition of MEGA Brands in 2014. Cash flows used for financing activities and other were approximately $531 million, compared to approximately $248 million in the prior year. The change was primarily driven by prior-year net proceeds from long-term borrowings and lower proceeds from stock option exercises, partially offset by lower share repurchases.
Capital Deployment
The board of directors declared a 2016 first quarter cash dividend of $0.38 per share, which is flat compared to the first quarter of 2015. The dividend will be payable on March 4, 2016, to stockholders of record on February 17, 2016.
Sales by Brand
Mattel Girls and Boys Brands
For the fourth quarter, worldwide gross sales for Mattel Girls & Boys Brands were $1.14 billion, up 1 percent in constant currency versus the prior year. Worldwide gross sales for the Barbie brand were up 8 percent in constant currency. Worldwide gross sales for Other Girls brands were down 28 percent in constant currency. Worldwide gross sales for the Wheels category, which includes the Hot Wheels and Matchbox brands, were up 26 percent in constant currency. Worldwide gross sales for the Entertainment business, which includes Radica and Games, were up 16 percent in constant currency.
For the year, worldwide gross sales for Mattel Girls & Boys Brands were $3.46 billion, down 2 percent in constant currency versus the prior year. Worldwide gross sales for the Barbie brand were down 1 percent in constant currency. Retail sales for Barbie accelerated on a global basis in 2015, driven by continued strong performance in the United States, and improved momentum in international markets. Worldwide gross sales for Other Girls brands were down 17 percent in constant currency. Worldwide gross sales for the Wheels category were up 21 percent in constant currency. Worldwide gross sales for the Entertainment business were up 1 percent in constant currency.
Fisher-Price Brands
Fourth quarter worldwide gross sales for Fisher-Price Brands, which includes the Fisher-Price Core, Fisher-Price Friends, and Power Wheels brands, were $626.2 million, up 13 percent in constant currency versus the prior year. For the year, worldwide gross sales for Fisher-Price Brands were $1.85 billion, up 7 percent in constant currency versus the prior year.
American Girl Brands
Fourth quarter gross sales for American Girl Brands, which offers American Girl-branded products directly to consumers, were $271.8 million, down 14 percent in constant currency versus the prior year. For the year, gross sales for American Girl Brands were $572 million, down 7 percent in constant currency versus the prior year.
Construction and Arts & Crafts Brands
Fourth quarter gross sales for Construction and Arts & Crafts Brands, which includes the MEGA Bloks and RoseArt brands, were $130.2 million, up 11 percent in constant currency versus the prior year. For the year, gross sales for Construction and Arts & Crafts Brands were $351.7 million. Mattel acquired MEGA Brands, Inc., on April 30, 2014.
Wicked Cool, Alchemy II Partner to Relaunch Teddy Ruxpin
Wicked Cool Toys has teamed up with Alchemy II, Inc., to relaunch the Teddy Ruxpin brand globally with toys, content, and a comprehensive licensed merchandising program. The relaunch is planned for fall 2017.
“Teddy Ruxpin’s play pattern and infusion of technology was way ahead of his time back in the ’80s, and with continued massive parental awareness it’s the right time to bring back this coveted brand,” said Michael Rinzler, co-president and founding partner, Wicked Cool Toys.
Created in 1985 by Ken Forsse, former Disney Imagineer, Teddy Ruxpin was the very first of its kind, creating a new industry category in talking toys.Teddy Ruxpin sold more than eight million units in a few short years and was accompanied by a 65-episode TV series.
“Teddy Ruxpin is more than just a toy,” said Jan Forsse, president of Alchemy II. “He’s about friendship, magical fun, storytelling, and literacy, and we believe the team at Wicked Cool Toys has just the right experience to bring this friend-for-life franchise back to life for a whole new generation of kids.”
ASTRA Announces Marketplace & Academy Keynote Speakers
The American Specialty Toy Retailing Association (ASTRA) announced that stress management guru Colette Carlson and Bob Phibbs, the Retail Doctor, will headline ASTRA’s 2016 Marketplace & Academy. This year’s event will take place June 5–8, 2016, in Denver, Colo.
Carlson will open Marketplace & Academy with an interactive keynote titled Stress Less: YOU Management vs. Time Management!, packed with ideas ASTRA members can use to produce more in less time with fewer resources, while staying focused, positive, and engaged. Participants will learn how to challenge unrealistic expectations, how to stay cool in stressful situations, and how to beat the stress of everyday life in healthy ways. Carlson is a Certified Speaking Professional (CSP) who is known for her ability to consistently deliver a high energy, humorous, and relevant message.
Phibbs will send ASTRA members home inspired to increase their organization’s value through people, not price. Being Brilliant on the Basics will give members creative new ideas for attracting and training better employees, ideas for reinventing the in-store experience, and tools for engaging their customers. With more than 30 years of experience beginning in the trenches of retail and extending to senior management positions, Phibbs is a nationally recognized expert on retail strategy, customer service, sales, and marketing.
Visit www.astramarketplace.org for the complete ASTRA Marketplace & Academy program. Registration is now open. Early bird registration ends February 29.
Saban Brands Reunites with Paul Frank to Guide the Brand
Saban Brands announced the appointment of artist and designer Paul Frank as director of creative development for the company. Frank is the original founder of Paul Frank Industries (PFI) and the creator of Julius the Monkey, as well as the additional cast of Paul Frank characters. In his new position, he will serve as a key player for Paul Frank Industries and bring authenticity back to the brand, while also working on new character development and other content for additional properties in the Saban Brands portfolio.
Saban Brands acquired PFI in August 2010. Today, more than two decades from when the company was founded in Huntington Beach, Calif. in 1995, Paul Frank Industries has become a global phenomenon.
During his time at PFI, Frank was the visionary force behind the company and provided creative content and direction over the brand’s logo, product design, brand expansion, co-branding, animation, and marketing. Additionally, Frank designed all of the Paul Frank Industries retail store locations. Also during his tenure, Frank partnered and collaborated with many other artists, designers, actors, musicians, and brands on limited-edition products.
Incredible Novelties Acquires Distribution Rights to The Original Designer Noodle in Canada
Incredible Novelties has acquired distribution rights to The Original Designer Noodle in Canada, shipping at the beginning of March. These noodles are manufactured with a UV spandex cover that protects the noodle so they last longer than others on the market, aids in the prevention of environmental damage, and discourages children from putting the noodle in their mouths, according to the companies.
What’s New in Electronic Stuffed Animals on TTPM
Wicked Cool Toys and Alchemy II announced the relaunch of Teddy Ruxpin for 2017 (read the story above). Teddy Ruxpin launched the feature plush category in the 1980s. As technology has advanced, so has the realism and fun of Electronic Stuffed Animals. See the latest offerings here. And, for all the latest in Toys, Tots, Pets, and More as well as what’s trending, visit TTPM.com.