An investor firm has recommended to Mattel that the company should dump its American Girl and Fisher Price brands, which in recent years have gone woke AF and is probably the reason for the both of the brands failing as of late while the overall markets have been on the rise.
The recommendation comes via Barington Capital following Mattel’s recent quarterly earnings call.
Woke American Girl
American Girl used to be a respected doll brand but now apparently has lost its way and has gone woke with books about race and inclusion and lessons on white privilege and structural racism.
The dolls used to be history dolls but are now representative of the girls that buy them where “girls can customize their dolls, with a rainbow of skin colors and hair types.”
Instead of children helping children, the American Girl brand now sends the message “it is on their oppressors” to “rescue the girls from their terrible lives.”
What does Barington Capital say about American Girl?
Barington Capital has revealed American Girl sales are “down 61% between 2016 and the last 12 months ending September 30, 2023 compared to approximately 23% growth in global doll revenue between 2015 and 2022.”
So that means America Girl sales have dropped while the global market for dolls actually increased.
Woke Fisher Price
Regarding Fisher Price, back in 2022, the company debuted the “Little People” RuPaul Drag Race toy set featuring tiny figurines sporting looks from the RuPaul’s Drag Race TV show.
The set debuted at EW.com:
“A representative for Fisher-Price tells EW the brand worked closely with RuPaul and his team on the release to ensure that they represented him “in the most authentic way,” which includes two figures wearing gowns modeled after real fashions worn by RuPaul, while the third look includes color schemes fusing both looks together in a suit that recalls the Klein Epstein & Parker ensembles Ru regularly wears in the show’s storied Werk Room.
The packaging for the toys features a stage, spotlight, and glitter designs for displaying the RuPaul figures. A brand synopsis indicates that the release aims to honor “RuPaul’s efforts to inspire people young and old to be true to themselves.”
What does Barington Capital say about Fisher Price?
Similar to American Girl, Barington Capital reveals Fisher Price deteriorated by more than 40% with its Infant, Toddler, Pre-School segment (ITPS), “from an estimated $1.9 billion in 2015 to less than $1.0 billion in the 12 months ending September 30, 2023. In comparison, global revenue of ITPS toys grew by approximately 17% between 2015 and 2022.”
Again, Fisher Price sales declined while the ITPS market actually increased.
The fix?
Barington Capital, who “has a long history of assisting undervalued publicly traded companies to unlock value,” recommends to Mattel that Mattel either fix the American Girl and Fisher Price brands or get rid of them.
Brands are now detracting from the success at Mattel
“In our view, this long-run market share cession suggests that Mattel may not be the right owner of these brands. Indeed, we believe that these brands are now detracting from the success at Mattel’s other segments, and hurting shareholder value,” states the report. “
Putting a dark cloud over the Company
The report continued, “We believe that Mattel’s inability to fix the American Girl and ITPS segments is putting a dark cloud over the Company, dragging down growth and deterring investor interest. If Mattel cannot fix these segments, as part of the Company, as appears to be the case, we believe that the Company should immediately explore strategic alternatives.”
Mattel should sell them
“SpinMaster’s recent of acquisition of FisherPrice competitor, Melissa & Doug, for $950 million or 2x revenue and 10.5x EBITDA, suggests now is the time to consider the sale of Fisher-Price and American Girl,” says the report. “In our view, there could be strong demand for these highly recognized brands, and a sale would not only free up capital for other activities, but would change the growth profile of the Company and yield a higher multiple of earnings for the stock.”
Mattel CEO responds
The CEO of Mattel responded to Barington Capital (via THR) and told media analysts the Fischer-Price and American Girl properties remain valuable toy brands that the company would continue to invest in.
“We believe we have a very strong portfolio, we always evaluate our portfolio to position the company for growth in line with our strategy to create long term shareholder value,” Mattel CEO Ynon Kreiz said in response to an analyst question about the Barington Capital letter.
