The Mattel Inc. logo is displayed outside the headquarters of the toy company known for products including Barbie and Hot Wheels in El Segundo, California, on June 8, 2023.
Patrick T. Fallon | AFP | Getty Images
Activist investor Barington Capital is pushing Mattel to contemplate selling off its American Girl and Fisher-Price brands, citing underperformance inside the divisions.
Mattel shares gained 4% in Friday trading following a letter sent to Mattel on Thursday, which was first reported by The Wall Street Journal. The toymaker’s shares trade at roughly the identical level as they did 20 years ago. Barington has an undisclosed stake in the corporate.
American Girl and Fisher-Price, two iconic brands, are amongst the most well-liked of their respective markets.
While the broader market has grown for the type of toys that Fisher-Price makes, Barington’s James Mitarotonda said within the letter to CEO Ynon Kreiz that Fisher-Price’s revenue has fallen from $1.9 billion in 2015 to lower than $1 billion by 2023.
Mitarotonda said that if Mattel cannot stymie continued erosion in each Fisher-Price and American Girl, which has suffered similar declines, the corporate “might not be the best owner of those brands.”
Barington suggested the corporate should “immediately” explore strategic alternatives for those two segments.
“We consider that these brands are actually detracting from the success at Mattel’s other segments and hurting shareholder value,” Mitarotonda said in a release.
A Mattel spokesperson said in a press release to CNBC, “We stay up for engaging with Barington as we do with all our shareholders. We welcome this initial outreach and we’re reviewing their letter.”Â
The letter also highlighted “excessive” stock-based compensation that was higher than a gaggle of peer corporations, and claims Mattel continues so as to add back share-based compensation to the corporate’s adjusted EBITDA, a practice Barington called “shocking.”
Barington also told Kreiz that the corporate should pause continued merger and acquisition efforts in favor of a $2 billion share repurchase operation, which could be an expansion of the corporate’s existing share buyback program, and elevate lead director Michael Dolan to chair, a position Kreiz currently holds.
Dolan is the previous CEO of Bacardi, IMG and Young & Rubicam, an promoting firm.
Barington has pursued campaigns at Bath & Body Works, Darden Restaurants and Chico’s. It was founded in 2000.
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