The No. 2 toy firm within the U.S. is coping with tariffs by shrinking its manufacturing operations and leaning into films starring its greatest manufacturers, chief government Ynon Kreiz stated at an funding convention on Thursday.
“We used to be called a toy manufacturer,” Kreiz stated at the united statesGlobal shopper and Retail Convention in NYC. Now “We have become an IP [intellectual property] company.”
This transition comes as Mattel –second to Hasbro — has been shrinking its manufacturing operations and leaning into licensing its sizzling properties, together with Barbie, Scorching Wheels and Uno, amassing royalties on them.
The success of its blockbuster Barbie film in 2023 spawned a mini pink revolution that Mattel cashed in on as greater than 15 different firms made Barbie impressed attire, furnishings, linens, jewellery and even toothbrushes.
On the similar time, the El Segundo, Calif.-based agency has closed or consolidated 5 factories, together with a sixth one this yr, the CEO stated on Thursday.
Mattel started paring again its manufacturing operations six years in the past, nicely earlier than tariffs turned a sizzling button challenge, Kreiz stated.
Mattel’s aim is to scale back its reliance on China – which accounts for about 40% of its manufacturing – and to develop relationships with different low value nations.
It presently manufactures in seven nations, together with Mexico which is dealing with a possible 25% tariff after April 2.
However its a 20% tariff on items made in China that represents an existential menace to the toy trade which makes 80% of its items in China.
Mattel executives have beforehand stated that tariffis will doubtless elevate the price of its toys this yr. Different toy firms are scrambling to search out options to China as nicely.
“We don’t expect any single country to account for more than 25% of our production,” Mattel chief monetary officer Anthony DiSilvestro stated on the convention. He didn’t present a timeframe for these manufacturing targets.
In the meantime, Mattel is filming two films “Masters of the Universe” in London and “Matchbox” in Morocco.
“We have 14 other movies and TV products in development,” Kreiz stated. “You don’t need a Barbie movie success,” to have a optimistic impression on the corporate.
Final yr, gross sales of Scorching Wheels merchandise eclipsed Barbie associated merchandise, Mattel stated.
