Sun. May 29th, 2022


Mattel’s foot fits the glass slipper after all. The US toymaker has won back the rights to make toys based on Disney’s princess characters, including Frozen‘s Elsa and Anna, a duo irresistibly fascinating to millions of small girls.

It’s a coup. The company lost the prized license to rival Hasbro in 2016. That triggered financial turmoil and executive departments. Mattel fended off two takeover attempts.

The Disney princess industrial complex is a big business. Millions of dollars are spent every year on licensed clothing, games, decor and toys. Dolls are the crown jewels of the product range. At peak in 2014, the market for 12in plastic Jasmine, Snow White and Moana dolls was worth as much as $ 565m, according to Jefferies. That was about 10 per cent of Mattel’s annual revenue.

Mattel’s shares were flying on Wednesday. The stock, up more than 20 per cent over the past 12 months, is trading on a decent forward earnings multiple of 16 times. Yet princesses alone will not be enough for Mattel to live happily ever after. The Barbie doll maker is unlikely to get as big a boost to sales this time round.

Disney has yet to release another film to generate the mania of Frozen, released in 2013. This is reflected in sales. Jefferies reckons the princess doll market is worth just $ 150m and Mattel might boost that to $ 250m.

The toy market has fractured over 10 years. Toymakers, more than ever, are competing against video games and social networks.

Mattel returned to sales and profits growth only in 2020 following years of decline and losses. That was largely thanks to the pandemic. Parents stockpiled toys and games to keep children entertained.

Mattel should pull in sales of $ 5.3bn in 2021. That would be about 18 per cent lower than the total of $ 6.5bn in 2013. The group has $ 2.7bn of net debt, about three times forecast ebitda, according to S&P Global data. Mattel will have to sell plenty of tiaras and plastic princess slippers to bring the magic back.

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