At the Investor Day, Mattel outlined its new strategic direction underpinned by the company's investment thesis:
"Our vision is to inspire the wonder of childhood as the global leader in learning and development through play. As we shift our business aggressively in a new strategic direction and transform how we operate, I believe we have the assets to achieve this vision and shape the future of the toy industry," said
A Future-Proofed Long-Term Strategic Framework
Mattel will focus on a five-pillar strategy:
1) Build Mattel's Power Brands into Connected 360-degree Play Systems and Experiences
Building Mattel's Power Brands into connected 360-degree play systems and experiences starts with the consumer and creates purposeful worlds of play. The company has created a brand development framework to unlock the scale and profitability of its brands.
Mattel is already moving quickly on this path by continuing to expand its brands' physical play systems. Mattel plans to bring new scaled, digitally connected toy offerings to market starting in fall 2018.
2) Accelerate Mattel's Emerging Markets Growth with Digital-First Solutions
Mattel plans to accelerate growth in emerging markets, which is expected to be the biggest driver of future industry growth. The toy market in these regions is still emerging with spend per child a fraction of the U.S.
Mattel's purposeful brands are well aligned with the needs of Chinese parents, and Mattel has taken a solutions-based and digital-first approach to localize products, which has enabled the company to scale rapidly over the past five years. This success, along with Mattel's rich learning and development curriculum, has earned the company ground-breaking partnerships that will support accelerated growth. Mattel predicts that its
3) Focus and Strengthen Mattel's Product Innovation Pipeline
To focus and strengthen its product innovation pipeline, the company is shifting to a company-wide approach to manage its innovation portfolio - and eliminating siloes across brands, categories and partners. This includes aligning metrics and investment levels with the respective opportunities and encouraging more aligned risk-taking across initiatives. As a result of this, the company expects to speed up its innovation cycle time - targeting 6 to 9 month cycles to develop new products, versus 18 months today.
The company will drive growth within its innovation pipeline in three key areas:
4) Reshape Operations to Enable Mattel's Strategy
To enable the company strategy, Mattel plans to reshape its operations to be faster, leaner and smarter. As a part of this, the goal expects to free up
5) Ignite Mattel's Culture and Team
To reignite the culture, Mattel has launched a new purpose, promise and values that will help to unleash the innovation, collaboration and speed the company needs to succeed. In addition, the company has hired and will continue to hire strategic talent to seed change across the organization and accelerate its progress forward.
Mattel has already added a suite of talent across the organization in areas including brand management, commercial, manufacturing, connected product development, ecommerce, content and digital market. This will continue to be a priority going forward.
Investment Strategy / Capital Allocation
To drive growth and margin improvement, Mattel will be making incremental investments. The company expects the cumulative incremental investment to execute this strategy in both capital expenditures and operating expenditures will be approximately
The company will right-size its dividend to free-up resources for reinvestment as well as strengthen its balance sheet and provide added financial and strategic flexibility.
Medium-Term Financial Outlook
In the medium-term, Mattel believes its future-state business model can achieve mid-to-high single digit revenue growth and operating profits at, or above, 15%.
An archive of the Investor Day webcast is available on Mattel's Investor Relations website, http://investor.shareholder.com/mattel.
This press release contains forward-looking statements on a variety of matters. These forward-looking statements are based on currently available operating, financial, economic and other information, and are subject to a number of significant risks and uncertainties. A variety of factors, many of which are beyond our control, could cause actual future results to differ materially from those projected in the forward-looking statements. Some of these factors are described in the Company's periodic filings with the
This press release and our Investor Day slide presentation are available on Mattel's Investor Relations website, http://investor.shareholder.com/mattel, under the subheading "Events & Presentations."
Mattel is a creations company that inspires the wonder of childhood. Our mission is to be the recognized leader in play, learning and development worldwide. Mattel's portfolio of global consumer brands includes American Girl®, Barbie®, Fisher-Price®, Hot Wheels®, Monster High® and Thomas & Friends™, among many others. Mattel also creates a wealth of lines and products made in collaboration with leading entertainment and technology companies. With a global workforce of approximately 32,000 people, Mattel operates in 40 countries and territories and sells products in more than 150 nations. Visit us online at www.mattel.com.
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