Mattel: come on Barbie, let’s go shopping

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The world is in the throes of Barbie mania. The movie, expected to be a breakout success at the box office this weekend, could make Mattel’s rags-to-riches fairytale come true. 

The $7.5bn toymaker’s chief executive Ynon Kreiz has pulled off a coup. With a background in TV, Kreiz was well-positioned to reimagine Mattel not primarily as a manufacturer, but as a manager of intellectual property. 

That was necessary. Mattel badly needed a new playbook. It lost a big chunk of business when key customer Toys R Us went bankrupt in 2017. Indeed, between 2017 and 2019 the toymaker posted cumulative net losses of $1.8bn. It had a good pandemic, but the cost of living squeeze and an inventory pile-up pushed it into a $106mn first-quarter loss this year.

Barbie, its flagship property, has also had a chequered decade. Accounting for almost 30 per cent of Mattel’s $5.4bn in sales, it has come under attack for promoting an unrealistic image of women. In 2014, Barbie’s global sales dropped below $1bn, and it was outsold by the Elsa doll from Disney’s Frozen. 

The movie will help. Already the world is awash with pink. Dozens of licensing deals have been announced. Typically, Mattel would take a cut of the revenues from Barbie-branded products, which Goldman Sachs analysts estimate at 10-20 per cent. 

The movie’s popularity will also drive sales of the iconic doll. This may not happen immediately. After all, director Greta Gerwig’s opus is squarely aimed at adults. But two hours in a Barbie-themed world will probably inspire parents’ choices for upcoming birthdays and festivities, driving longer term growth. 

Third, Blockbuster Barbie will reassure Mattel’s investors. If Kreiz’s IP-driven strategy has legs, shareholders will hope that might be applied to the toymaker’s less iconic brands too. Barbie buzz has driven up Mattel’s stock price by 20 per cent in the last month. If the movie delivers, there may be more to play for.