Mattel 2014 Annual Report Download - page 3

TO OUR SHAREHOLDERS:
By any measure, 2014 was –
candidly – a challenging year for
Mattel. Even as the global toy
industry grew in 2014, we fell short
of our own expectations, as well
as those of our shareholders. The
numbers tell the story. Mattel’s
worldwide net sales declined
approximately 7%1. Lower sales, exacerbated by higher costs,
resulted in earnings per share of $1.45, compared to $2.58 in
20132.
But, I want to assure you, we are not standing still. We are taking
bold and aggressive steps to reignite momentum in 2015 and
beyond. As Chairman and Chief Executive Offi cer of Mattel,
I am squarely focused on working with our talented team to
revitalize the business. As we develop our go-forward plan, we
are addressing the areas where we fell short in 2014, which we
believe fall into three categories.
First, in a highly-competitive retail environment, our brands
and products were not suffi ciently compelling to consumers.
While some brands performed well, many did not, and product
innovation was inconsistent across our portfolio. Moreover, our
marketing efforts delivered mixed results and did not generate a
lift in overall brand sales.
Second, 2014 brought one of the most competitive environments
in the doll category we have seen in many years. Overall, the
doll category accounts for about 40% of Mattel’s total business3,
and our portfolio includes the top fi ve most popular fashion doll
properties in the world4. The doll category, however, did not
show signifi cant overall growth in 20145. And, as a result, the
remarkable success of Disney’s FrozenTM franchise came at the
expense of several of our brands, including Barbie®6.
Third, our retail execution did not meet our expectations. Our
results were impacted by inventory overhang from 2013 and,
against the backdrop of a more challenging retail environment we
did not execute well in-store, resulting in a decline in retail support
and shelf space productivity.
Clearly, we have a lot of work to do. But there is ample reason
to be optimistic about Mattel and our performance over the long
term. Our unmatched portfolio of iconic brands, global scale and
strong balance sheet give Mattel a unique and enviable position
of leadership within the industry. The worldwide toy industry itself
is strong and growing, having shown 4% annual growth last year7.
And we benefi t from world-class talent across every function of
the company.
I am confi dent that Mattel has at its disposal every tool and
resource necessary to maintain a strong leadership position within
the toy industry. In 2015, we are taking a number of aggressive
steps to deliver improved profi tability throughout the business.
These steps include:
• Driving innovation across our key brands, and in particular
amongst those in the doll category;
• Developing and implementing a rigorous sales plan – both
in-store and online – to improve customer service and retail
performance;
• Accelerating our efforts to better position Fisher-Price® as a
child development brand; and
• Focusing our efforts on the most signifi cant international
market opportunities for our brands.
Additionally, through the Funding Our Future initiative, we will
continue to reduce costs throughout the business, reinvesting the
savings to support our efforts around restoring and growing our
profi tability.
2015 marks an important milestone for Mattel, as the company
celebrates its 70th anniversary. In keeping with Mattel’s rich
history of building cherished brands and memorable play
experiences for children, we will continue to bolster our creative
momentum and enhance brand relevance by partnering with
some of the biggest brands in kids’ entertainment. In addition to
outstanding partnerships with © Disney, Nickelodeon®, Warner
Bros. Consumer Products and WWE® Wrestling, we recently
added Star WarsTM to our ever-expanding entertainment portfolio,
as well as new licenses like Teenage Mutant Ninja Turtles®.
And we are exploring innovative partnerships to bring new
perspectives and dimensions to our products in 2015 and beyond.
In fact, earlier this year we announced a novel collaboration with
Google to reimagine the venerable View-Master
®, giving the iconic
toy a 21st-century twist.
I passionately believe in Mattel, our time-tested brands, our
fi nancial strength and our world-class talent. Thank you for your
ongoing support, as we work to revitalize the company and its
brands, deepen our connections with children and parents around
the world, and deliver value to you, our shareholders.
Sincerely,
Christopher A. Sinclair
Chairman and CEO
Mattel, Inc.
__________________________________________________________________________
1 Mattel Financials
2 Mattel Financials
3 Mattel Internal Analysis
4 The NPD Group/Retail Tracking Service/Annual 2014
5 The NPD Group/Retail Tracking Service/Annual 2014
6 Mattel Internal Analysis
7 The NPD Group/Retail Tracking Service/Annual 2014