29 May 2014
The world’s biggest toy manufacturer, Mattel, saw a significant drop in sales during the Christmas season of 2013 – a period where toy makers generate a minimum of 40% of their annual revenue. Mattel reported a 9% decrease in share price, attributing the drop primarily to their two biggest departments, Barbie and Fisher-Price.
Barbie and Fisher-Price sales decreased 13% each, Hot Wheels decreased 8%, however, the American Girl line increased 3%. During the fourth-quarter in 2013, Mattel produced US$369.2 million (US$1.07 per share), far below what analysts and Mattel expected.
The challenge toy manufacturers face is the rapid development of technology, electronic devices and digital games. To counter poor sales in 2013, Mattel have acquired MEGA Brands (for US$460 million) to increase and diversify the company’s product line. However, traditional toy companies like Mattel will sooner or later have to compete with the digital industry, and tackle the ever growing and dependent consumer preference for it.
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