MAT
#Thank you, Margo.
I'm very excited about the opportunity to lead Mattel as its new CEO and deliver on our strategic plan as we return the company to its leadership position as a high-performing toy company.
We have a lot of work to do to reach our objectives.
But I'm very confident that we have the right plan and the right team in place.
And as you will hear today, we are already making strong progress against our strategic pillars.
My immediate focus includes the following priorities: Implementing our Structural Simplification to restore profitability; stabilizing revenue; reinvigorating our concept to drive creativity, which I believe is essential to our success; and strengthening our collaboration with our partners.
Long term, I'm committed to better leveraging our intellectual property to unlock the full potential of this great company.
I look forward to working with the talented team here to deliver on our transformation plan and maximize long-term value.
And I look forward to speaking and meeting with all of you, our analysts and investors, as we continue to provide updates and discuss our opportunities ahead.
I want to thank Margo for her leadership, her hard work and her many important contributions.
It has been a pleasure working alongside her at Mattel during my time with her in this company.
I'm happy to take your questions at the end of the call.
And now I'll turn over to <UNK> to take over from here
Thank you, <UNK>.
I\
Thank you, <UNK>, and good afternoon, everyone.
Let me start by thanking Margo for being a great partner.
She has had a tremendous impact on the organization over the past year and I wish her all the best in her new endeavor.
I look forward to partnering with <UNK> and believe we are in great hands with him at the helm.
I have no doubt that his insights and expertise will be invaluable as we progress our strategy and operationalize our plan forward.
So with that, let\
So Tim, I'll take the first part of the question.
It's <UNK> here.
On the Barbie and Hot Wheels front, we are very proud of the performance for the quarter.
But as you know, these brands in our portfolio has been in deep work in the context of getting POS and shipment aligned and ultimately, driving the 360-degree play systems that these brands are now getting traction with.
But I think we are seeing the beginning results of what we believe is great momentum and Barbie of course having a really terrific quarter, Hot Wheels right behind it.
We are excited with the programs that we have to maintain these numbers and we expect to have continued great narration in the future.
This is Joe.
In regards to the second part of your question, I think everybody is pointing towards midyear maybe in the summer.
But it's ---+ there's so many moving pieces with the T<UNK>U liquidation.
I mean you got everything going on in Asia.
You got what just happened with Smith's, you've got the Canadian deals.
So it's really hard to predict.
Yes, without a doubt.
I mean, remember in December we went out and sort of restructured our capital structure by putting on the $1 billion and then putting the $1.6 billion ABL in place.
So we feel good about that.
We haven't had to draw on the ABL to date.
We are focused on the Structural Simplification program that helps take the cost out of the company.
So yes, we know we have the maturity coming up in May of 2019.
We feel we have the access to the markets.
We feel we are pretty well-positioned.
Thank you.
Thank you.
Well, nice to meet you.
I actually do have toy experience from my work at Fox Kids that I launched and ran and took public.
But I bring to this more than 20 years of relevant experience, including having served as Chairman and CEO of three companies.
I successfully delivered transformation to create significant value to shareholders.
And more than anything, I focus ---+ I have deep experience in focusing on operations and execution of turnaround plans.
So I feel pretty good about where I sit.
Very good.
I mean, we are feeling very good about our positioning and working with our customers.
So we are ---+ I mean, we feel like we are getting our mojo back, quite frankly.
I mean the team really executed well in the first quarter and we continue to maintain ---+ we did a great job at year end, bringing down those inventories to a very, very tight level.
We continue to monitor that.
And we clearly want on a going forward basis to have demand before we have supply.
Yes, we can.
I think those are sort of apples and oranges sort of positioning.
We haven't really given those numbers.
But remember that the delta probably what you're looking for is probably 2%, give or take.
It's probably.
.
Yes, we can ---+ we haven't disclosed that information.
But we can take a look at that for you.
I understand what you're trying to do, the Easter impact to how big it was.
I think, we have pretty good momentum.
But I don't have that number for you.
<UNK>, Easter was about two weeks earlier this year, which provided may be mid-single POS digit increases in the quarter.
But it's really important to understand that Easter actually didn't drive the quarter.
Barbie and Hot Wheels truly drove the quarter.
Yes.
Yes, I\
Obviously, Toys "<UNK>" Us was ---+ is a big impact to us.
Just to size it for you, so if you want sort of the book ends, we did say at Toy Fair, before we knew the liquidation and stuff, that we thought we would be flat on a top line basis.
And that was assuming they just announced some store closures.
So that was about 25%.
And if you go back to our 10-K at the end of \
Yes.
Look, I'm very excited to be here.
The big picture opportunity is to transform Mattel to an IT driven high-performing toy company, that is more efficient, more profitable and has a higher growth trajectory.
We have very strong assets, including some of the world's best and greatest toy brands.
We have a very good team and we have a strong strategy that I feel very good about.
So our focus now is to deliver on our transformation plan and maximize value for the company and our shareholders.
This is not going to be easy.
There's no denying that we faced significant challenges over the last few years and there are still headwinds in certain key areas of our business.
But I feel confident about where we sit and what we have to do to take it on.
Sure.
We are incredibly proud of the Barbie brand performance globally and across all accounts.
We\
No.
There's no association with any impact that I could speak of that would affect it.
No, well, it's all about our POS.
And our POS has been literally double digits around the world.
Our inventory was down approximately 20%.
And now our stocks are in line with our POS.
And so we feel very strong about the quality of inventory that we have.
The momentum on the top line is driving of course the shipments.
And we feel we are completely in line with where the brand is headed and our inventory models are in line as well.
Shipping and POS has been ---+ never been better in the context of the Barbie brand.
Yes.
I mean, look, we just finished the recapitalization with the $1 billion in the ABL.
We've got 12 months out to do something.
The markets are open to us.
My belief is we had a pretty good ---+ we had a great quarter here and we are working on the next one.
So we have some runway room to come up with the answer to that question.
Sure, <UNK>.
So Hot Wheels also had a great quarter on top of what was a really solid year last year, which was as you know, a big vehicle category driven year.
We\
So I think a couple of things.
One is we have a new guy running Europe, who was just really starting to gain some momentum.
We reorganized the Asia Pac region under Peter, who is just doing fantastic and bringing all those properties to bear.
So I think really what you'll start seeing is with some of the people movement we had and the brands that are doing so well, we are just starting to gain some momentum back and move forward.
<UNK>, what do you think.
Yes, I would just add to that.
Our focus on consistent execution of our Power Brands around the world is paying off.
A lot of time and energy has been spent reengineering the line architecture, driving new media and marketing for momentum.
And as you know, we've been spending a lot of time developing those retail relationships.
And I think you're just starting to see the beginnings of what is traction on those brands.
We are continuing to develop our partnerships with people like Alibaba, Fosun, Babytree and they're continuing to enable us to differentiate in the China market.
The partnerships are growing and advancing.
We will continue to update you as they have more updates to share.
But we are really pleased with all of the progress that we are making and we are on track with our performance and our expectations of where these partnerships will go as well as working on rollouts.
In particular with some of these partnerships around Asia and around the rest of the world.
Yes, I think in regards to that, it's sort of an ongoing process.
But remember, a lot of the SKU reduction isn't really sort of an elimination of the brand but might be different things within the brand.
So ---+ but we've made great progress on it, it's something that each of the brands are very, very focused on and managing that tightly.
And it makes ---+ and we continue to work on it.
So it's something that will be ---+ has provided some benefit to date and will provide added benefit in the future.
Yes, we won't share the specificity on what the expectations are for that total.
But I can tell you, early reads are incredibly exciting.
The merchandise that has hit has been flying off the shelves.
Around the world, we have incredible excitement, not only for the product itself but obviously for the movie that comes out in June.
And it is strategically part of our Toy Box narrative that will ultimately make up some of the volume from Cars.
That being said, it's important to note.
Cars is performing really well.
We're having a great partnership with Disney.
We've been working very closely to continue that momentum.
We believe it's an evergreen property.
And so we've been really pleased with the performance and we continue to work very closely with them to ensure that we have a good year in Cars.
And we are working, as Joe was talking about the Toy Box, amazing partners.
And with the depth that we have and experience that we have on great innovative items, concentrating on innovation and creativity, not necessarily SKU count.
We are trying to get the best product that we can out there in the marketplace.
I'll start and Joe can add.
I mean, when you step back, we continue to take a lot of pride in the American Girl franchise.
And it's not necessarily a silver bullet answer.
We're overhauling the entire omnichannel experience, which includes evaluating bricks and mortar, ensuring also that we get the best product and price value equation right.
Customer relationships, whether they're online or in-store, is paramount for us to get exceptionally better at.
Data management, C<UNK>M is a really important part of the future, proof of that brand particularly as it started out as a direct brand, origins of that brand was as a catalog, delivering more effective direct marketing and loyalty programs to build attachment.
All of these things are really important ingredients that make up what is American Girl.
We take a lot of pride in that in-store experience and making sure that the relationships our consumers have when they get there is incredibly robust and exciting.
But ultimately, there's a lot of work to do on American Girl.
And as we've mentioned, it's in all these different parts.
Yes, I think the reality is we're kicking off this turnaround process now in these four key areas that we talked about.
So the idea would be once we start getting into '19, we start making that progress, we start flattening things out and then ultimately get back to growth.
We have a lot of repositioning to do, as <UNK> said.
But there's no doubt that focusing on the direct, focusing on the experiential store experience are all key parts to making American Girl successful.
I think any of us who are dads, who may be have gone through the experience at American Girl is memories we keep forever with our daughters.
So we will get back to that.
