After a sluggish holiday season, Mattel Inc. is hoping the most famous purple dinosaur in the world will help boost its sales.
The El Segundo-based toy company said that it is revitalizing the Barney brand as part of an overall effort to refresh its intellectual property.
The company plans to launch a new animated series centered on the friendly Tyrannosaurus made famous in the early 1990s. It is set to debut globally in 2024. A product line will follow the series in 2025.
“We will tap into the nostalgia of the generations who grew up with Barney, now parents themselves, and introduce the iconic purple dinosaur to a new generation of kids and families around the world across content, products and experiences,” said Josh Silverman, chief franchise officer and global head of consumer products at Mattel.
The company will market a full range of products geared toward children, including toys, books, and clothing.
Power of revivals
The toy maker also revived its Monster High and Masters of the Universe franchises in 2016 and 2021 respectively. Each has spawned successful content and consumer products.
“(Barney) is a huge property that Mattel owns from its acquisition of HIT Entertainment,” said Linda Bolton Weiser, managing director and senior analyst at D.A. Davidson & Co. “It makes sense to be reviving Barney. It’s not a crazy thought.”
The Barney franchise has historically targeted very young children. Will nostalgic parents steer their kids toward the benevolent T. Rex?
The show has been off the air for almost 14 years following a 20-year run.
“It’s a clean investment; dinosaurs have been popular with ‘Jurassic Park,’” said Arpine Kocharyan, executive director at UBS Investment Bank. “But it’s not a needle mover.”
The company is hoping otherwise, and that its overall strategy around nostalgic intellectual property will pay off soon. It posted disappointing fourth-quarter results earlier this month, a period that included holiday seasonal toy purchases. The company reported $1.4 billion in revenue, which fell short of Wall Street analysts’ expectations of $1.68 billion.
“Our fourth-quarter results were below our expectations, as the macroeconomic environment was more challenging than anticipated,” said Ynon Kreiz, chairman and chief executive of Mattel. “While less than expected, POS (point of sale) grew in the quarter and the full year, and we achieved growth in net sales in constant currency for the fourth consecutive year.”
Mattel saw the North America segment decrease 26% during the period, with declining sales in its Fisher-Price and its other doll and action figure brands. Mattel’s fourth-quarter sales were down 22% year over year, with brands such as Barbie and Hot Wheels having to increase prices. Mattel has owned Fisher-Price since 1993.
Other brands
Mattel said it expects growth in Barbie and Hot Wheels and a decline in Fisher-Price in 2023, all of which are separate brands in the company’s portfolio. Barbie makes up 25% of the company’s sales, Hot Wheels is 21%, while Fisher Price makes up 17%.
“This is an industry that has historically been very deflationary due to retail pressure,” Kocharyan explained. Big-box stores such as Walmart Inc. and Target Corp. have pressed toymakers to keep prices low to lure consumers.
In turn, “the consumer is under huge inflationary pressure,” said Kocharyan, referring to increases in the price of toys alongside rent, food and gas prices.
Kreiz noted that the increase in point-of-sale figures indicates a compelling consumer demand for Mattel products and “speaks to the strength of our portfolio as a whole, even in a challenging environment.”
“We believe we are well positioned to continue executing our multiyear strategy to grow our IP-driven toy business and expand our entertainment offering,” he said.
Analysts noted that the way Mattel is going about reviving the IP-driven products through content creation is strategic and won’t require a lot of the company’s resources. “(Kreiz) knows what he’s doing without betting the ranch,” said Bolton Weiser.
Analysts note that the toy industry relies on content and products that are hits, which are difficult to generate, but over time often play out as good bets. Partnering, as Mattel has with studios and production companies, mitigates a lot of the risk.
Barbie effect
Mattel is releasing a “Barbie” movie in July, a coproduction with Warner Bros. Discovery Inc. directed by Greta Gerwig and starring Margot Robbie and Ryan Gosling.
Analysts doubt that the brand’s live-action movie, which appears to be geared toward adults, will have a major impact on toy sales, but it may have a positive effect on brand awareness.
“Barbie has never had a box office event of this scale before” said Kocharyan. “Mattel’s management fully acknowledges the risks and opportunities that come with such an undertaking.”
The company also has a Hot Wheels movie in the works with director J.J. Abrams’ company, Bad Robot, in partnership with Warner Bros. Discovery.
“It’s very difficult to come up with evergreen brands,” said Kocharyan.
That’s evident with Mattel rival Hasbro Inc., which also reported disappointing holiday sales and announced it would cut 15% of its global workforce this year.
“The extent of Barbie/Hot Wheel growth versus decline in Fisher-Price will ultimately dictate whether Mattel’s flat constant currency guide is beatable,” Kocharyan said in a note to investors.
