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Mattel Inc MAT

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Toy Demand Persists at Mattel as COVID-19-Related Constraints Ease; Shares Fairly Valued

Jaime M. Katz, CFA Senior Equity Analyst

Analyst Note

| Jaime M. Katz, CFA |

As the global consumer began to resume their pre-COVID-19 activities, narrow-moat Mattel continued to benefit from healthy demand. While lapping a weak second quarter in the year-ago period (when net sales were down 15%), second-quarter fiscal 2021 net sales were 19% higher than the same period in 2019 (at $1.0 billion). Most of Mattel’s categories posted solid second-quarter results versus 2019, with sales of dolls up 44%, vehicles higher by 24%, and the challenger lines up 16%. The infant and toddler business seems to be stabilizing, posting sales growth in three of the last four quarters, but sales remain down 9% from second-quarter 2019 levels. Geographically, sales were broad-based, with net sales in North America up 30% (55% of sales) and international up 57%. More impressive was the progress Mattel made in profitability, with the adjusted gross margin rising 370 basis points, to 47.5%, a second-quarter level not seen since 2015. That was also the last year Mattel delivered positive EPS in a second quarter, with 2021 posting $0.03 in adjusted EPS.

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Company Profile

Business Description

Mattel markets toy products that are sold to its wholesale customers and direct to retail consumers. The company offers products for children and families, including toys for infants and preschoolers, girls and boys, youth electronics, handheld and other games, puzzles, educational toys, media-driven products, and plush and fashion-related toys. Mattel's owned portfolio includes Barbie, Hot Wheels, Fisher-Price, Thomas & Friends, and American Girl. In addition, it currently manufactures toy products for its segments both internally and externally (through manufacturing partners).

Contact
333 Continental Boulevard
El Segundo, CA, 90245-5012
T +1 310 252-2000
Sector Consumer Cyclical
Industry Leisure
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 32,100

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