The Reign Of Ynon Kreiz At Mattel

Feb. 11, 2019 7:28 PM ETMattel, Inc. (MAT)HAS15 Comments
Lutz Muller profile picture
Lutz Muller
914 Followers

Summary

  • The national buyers continue to believe that Ynon Kreiz is the one executive who can turn Mattel (MAT) around.
  • All company metrics suggest that he has already had a major influence in the way the company is doing its business.
  • His background suggests that he can unlock Mattel’s major asset – its IPs – in a way none of his predecessors has been able to do.
  • Headwinds continue for Fisher-Price, American Girl and Mega and all three will require a thorough revamping of the innovation process.
  • Looking for a portfolio of ideas like this one? Members of Business Intel On Toys get exclusive access to our model portfolio. Start your free trial today »

In August 2017 I wrote an article at Seeking Alpha assessing Margo Georgiadis’ performance as Mattel’s (NASDAQ:MAT) CEO after her first six months in that position. It was not altogether flattering.

I made two key observations in regard to her performance – one was that there was evidence that the retailers were induced to take more inventory than required by using the carrot of longer credit terms and this, in turn, artificially improved the company’s top line numbers. The second was that the cost of excessive bureaucracy was continuing to accelerate. Both could only happen because Ms. Georgiadis either tolerated it or in fact actively encouraged it.

She stepped down from her position as CEO of Mattel on April 26, 2018, and was replaced with Mr. Ynon Kreiz.

The national buyers at the major retailers were and are very positive about his appointment and believe that Mattel has, for the first time in seven years, a CEO who has the skills and the personal attributes required to turn the company around.

It is hence interesting to see how four key company metrics evolved during his stewardship since his appointment.

First, shipments. These have continued to decline but then so have those of Mattel’s arch rival, Hasbro (HAS):

Source: SEC filings

Both companies blame Toys“R”Us' demise for this. This is partly correct in that Toys“R”Us had traditionally been much more generous in its inventory policies than for instance Walmart (WMT) or Target (TGT) which meant that these additional shipments evaporated when TRU hit the dust. However, the major reason why both Mattel and Hasbro lost sales during 2018 was that they had to work down the excessive retail inventories they had built up over the past two years to meet unrealistic sales expectations. The good news is that both companies have

This article was written by

Lutz Muller profile picture
914 Followers
Lutz is an acknowledged expert on the toy space. His clients include one of the top three U.S. banks and one of the top three non-public toy companies worldwide. Between 1984 and 2002, Lutz was the CEO at five different manufacturing companies catering to U.S. and international mass retailers. He's lived on five continents and speaks six languages.He started his business intelligence consulting practice in 2003 and he derives his information from three primary sources. The first is his proprietary retailer panel, which includes Wal-Mart, Target, J C Penney, Kohl's, Gamestop, Dollar General, Barnes + Noble and Learning Express. This panel provides him with sell-through data, shelf space changes, inventory levels and other pertinent metrics governing the major companies and products active in the two industry categories. The second is national buyers at 30 leading retailers in 17 large country markets. These provide color on trends and issues that have a bearing on the major manufacturers and products in the two industry categories. The last is mainly Chinese third-party manufacturers who provide insights into supply and inventory issues affecting the major companies or products in the two industry categories.Lutz consults with banks and hedge funds, and hence does not trade in any stocks associated with companies active in the spaces he focuses on. Lutz also is a monthly contributor to Seeking Alpha. He also publishes a monthly Toy Newsletter, which can be found on his website, www.klosterstrading.com.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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