Mon. May 23rd, 2022

Shares in Mattel jumped almost 10 per cent on Wednesday after the US toymaker behind Barbie won back the global license to develop Frozen and Disney princess toys, seven years after losing it to arch-rival Hasbro.

Ynon Kreiz, Mattel’s chief executive, declined to disclose the financial terms of the deal but said it would be “accretive in and of itself”. The contract had been worth a reported $ 440m, or 7 per cent of Mattel’s annual sales, before it lost the franchise in 2015.

Sales from such franchises rise and fall with film release schedules. Jefferies analysts said the princess business was now worth less than $ 250m, down from peak revenues of $ 565m.

Hasbro would sustain a hit to profits of less than $ 20m, said Stephanie Wissink, a Jefferies analyst, but the net benefit to Mattel would be bigger given its larger presence in the dolls market.

Kreiz said that winning back the contract had been “a key priority” since he became chief executive in 2018 after a period of declining sales and leadership turmoil that followed the loss of one of the toy industry’s most fought-over licenses.

“It’s important in that it speaks to the strength and capabilities of the new Mattel,” he told the Financial Times. Mattel’s work on Disney’s Toy Story and Cars franchises had given Disney’s leadership confidence that it could “develop and grow evergreen properties”, he added.

Ynon Kreiz

Ynon Kreiz says winning back licenses to Disney’s Frozen ‘and other popular franchises was a’ key priority ‘© Kyle Grillot / Bloomberg

Kreiz, a former television executive, has overhauled brands like Barbie and launched a film division, as Mattel seeks to revive sales and emulate the success of rivals that have repositioned themselves as entertainment groups.

Disney will retain the entertainment rights to characters from movies including Frozen, Aladdin, Beauty and the Beast, Cinderella, The Little Mermaid, Mulan and Pocahontas, but Mattel’s agreement extends from dolls to games, consumer products and publishing.

Kreiz’s restructuring of Mattel has included cutting $ 1bn from costs, exiting factories and slashing capital spending, but he said its supply chain was “absolutely ready” to absorb the additional volumes.

The deal came as Hasbro announced a multiyear extension of its deal with Disney’s Lucasfilm arm, under which it will continue to create Star Wars toys and launch a new line tied to the upcoming revival of the Indiana Jones franchise.

Brands tied to the biggest film properties are continuing to take a growing share of the toy and consumer products industries, Kreiz noted. “In a world of unlimited supply, ubiquitous distribution and limited shelf space, big, trusted brands are more important than ever,” he said.

Mattel shares were up 8.7 per cent in morning trading market at $ 21.32. Shares in Hasbro slid nearly 2 per cent to $ 93.90.

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