The Mattel Inc. logo is displayed outside the headquarters of the toy company known for products such as Barbie and Hot Wheels on June 8, 2023, in El Segundo, California.
Patrick T. Fallon | AFP | Getty Images
Activist investor Barington Capital is putting pressure on us Mattel is considering selling its American Girl and Fisher-Price brands, citing underperformance within the divisions.
Mattel shares rose 4% in Friday trading after a letter was sent to Mattel on Thursday, first reported by The Wall Street Journal. The toy maker’s shares are trading at about the same level as they were 20 years ago. Barington owns an undisclosed stake in the company.
American Girl and Fisher-Price, two iconic brands, are among the most popular in their respective markets.
While the broader market for the type of toys Fisher-Price makes has grown, Barington’s James Mitarotonda said in the letter to CEO Ynon Kreiz that Fisher-Price’s sales fell from $1.9 billion in 2015 fell to less than $1 billion in 2023.
Mitarotonda said that if Mattel cannot prevent the continued decline at both Fisher-Price and American Girl, which have suffered similar declines, the company “may not be the right owner of these brands.”
Barington suggested that the company should “immediately” explore strategic alternatives for these two segments.
“We believe these brands are now impacting success in Mattel’s other segments and impacting shareholder value,” Mitarotonda said in a news release.
A Mattel spokesperson said in a statement to CNBC: “We look forward to working with Barington, as we do with all of our shareholders. We welcome this initial contact and are currently reviewing your letter.”
The letter also pointed to “excessive” stock-based compensation that was higher than a group of peer companies and alleged that Mattel continued to add stock-based compensation to the company’s adjusted EBITDA, a practice that Barington described as “shocking.” designated.
Barington also told Kreiz that the company should pause ongoing merger and acquisition efforts in favor of a $2 billion share repurchase, which would be an expansion of the company’s existing share repurchase program, and appoint executive director Michael Dolan as chairman , a position Kreiz currently holds.
Dolan is the former CEO of Bacardi, IMG and Young & Rubicam, an advertising firm.
Barington has run campaigns at Bath & Body Works, Darden Restaurants and Chico’s. It was founded in 2000.
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2024-02-02 21:01:40
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