Mattel Fourth-Quarter Profit Falls

LOS ANGELES (Los Angeles Times/TNS) -

The new chairman of Mattel Inc. said the problems plaguing the toy maker were largely its own fault, mere days after its chief executive abruptly resigned.

Christopher Sinclair, who also took over as interim CEO last week after Bryan Stockton quit, said Mattel “created” its own problems, which include an innovation gap and a failure to promote its brands effectively.

“Our results were not acceptable,” Sinclair told analysts and investors Friday in a conference call to discuss Mattel’s fourth quarter. “Our performance was impacted by a number of factors, some of which are out of our control, but most of which are not.”

Sinclair said a lack of “compelling” new toys contributed to a poor showing during the crucial year-end shopping season.

“Our product innovation was inconsistent,” Sinclair said. “Some brands performed well, but many did not.”

In the three months ended Dec. 31, Mattel said net income fell 59 percent to $149.9 million, or 44 cents a share. Sales dropped 6 percent to $2 billion, the fifth consecutive quarter of declines.

For the year, Mattel reported net income of $498.9 million, or $1.45 a share, down 45 percent from $903.9 million, or $2.58, in 2013. Sales dropped 7 percent to $6 billion.

Going forward, the new chairman, who has sat on Mattel’s board since 1996, said he’s focusing on evaluating all aspects of the company and improving marketing and performance overall. He said he’s working with the board to look for CEO candidates inside and outside Mattel.

Sinclair said bringing back Richard Dickson was key to unblocking the creative juices at Mattel.

“Part of it is also broadening our outreach for innovation,” he said. “There’s a lot of people and vendors in the marketplace that we’ve had to rekindle our relationships with.”

Dickson and Tim Kilpin, who directs sales and marketing globally, are leading internal contenders for the CEO job, analysts said. Both were named president this month.

The pair have already helped defuse tension between Mattel’s international and North America divisions, which created problems in the past, said Jim Silver, editor-in-chief of toy-review website TTPM, adding that employees have remarked on an improvement in the working environment in recent days.

“In the past two years, those two segments did not work well together, and it was a major cause of things not getting done and people not being on the same page,” Silver said. “Now Tim and Richard are in charge, and these two get along very well.”

Some observers questioned whether Mattel could turn around its fortunes in time for the next year-end shopping season.

“Sinclair does not seem like he can impact the situation much in the near-term,” Linda Bolton Weiser, senior analyst at B. Riley & Co., wrote in a client report. “We wonder how much holiday 2015 can be influenced if it takes several months to get a new CEO in place.”

Mattel’s stock closed Friday at $26.90, unchanged from Thursday.