August 17, 2009 HAPPIER HOLIDAYS AHEAD FOR MATTEL THROUGH NEW DOORS, TOYS AND HOME ENTERTAINMENT By David Franklin,
[email protected] 415.364.3780 OUR STARTING THESIS AND APPROACH FOR THE MATTEL PROJECT This week, Blueshift Research initiated research on Mattel Inc. (MAT). The original thesis questions whether Mattel can strengthen its brand while maintaining toy sellers’ support and under the guidance of the new general Barbie franchise manager, who is leading the doll line through a makeover. This study employed Blueshift’s pattern mining approach to establish contacts within five independent silos to assess the likelihood for sales growth. The silos: 1) store clerks and managers, 2) toy industry experts, 3) secondary sources, 4) competitors and 5) consumers. We interviewed 15 primary sources and reviewed more than seven secondary sources. SUMMARY OF FINDINGS Five of six retailers interviewed expect overall holiday toy sales to exceed last year’s levels. Two retailers said Mattel will benefit from new and creative Barbie end-cap displays, a Hot Wheels: Battle Force 5 TV series tie-in agreement and Avatar action figures scheduled to be released in October. Toy experts were split on their expectations for overall toy sales for the 2H09. One forecast flat sales, while the other expects a year-to-year increase. An industrywide price hike of 5% to 6% will help propel sales ahead of last year. Mattel implemented a modest price increase on its spring line of toys and a mid- to high single-digit hike on June 1. Wal-Mart Stores Inc. (WMT) is cutting shelf space for toys and crafts.