Mattel Looks to Barbie, Mickey to Help Profit

With considerable help from Barbie and Mickey Mouse, Mattel is slowly recovering from a difficult year marked by layoffs and plant closings, its chairman said Thursday.

Mattel is shifting its focus away from short-lived fads to toys that might last two years or more, John Amerman, Mattel chairman, told shareholders at the toy maker’s annual meeting on Thursday.

The Hawthorne company is focusing on its traditional toys, such as Barbie, its ageless teen-age fashion doll, and Hot Wheel die-cast cars. The company is also counting on its new line of preschool toys featuring Mickey Mouse and other cartoon characters licensed from Walt Disney Co., which has been received enthusiastically by retailers.

Amerman expects especially great things from Barbie; sales of the doll, her friends and accessories are expected to reach $400 million this year, or about 40% of Mattel’s yearly $1-billion sales. Barbie sales are up 20% over a year ago, he said, thanks to a new version of the doll that comes with her own perfume and makeup.

‘Rebuilding Year’

As a result of the shift to simple playthings, Mattel has significantly reduced the number of toys it sells. The company has weeded 150 toys from its product line, reducing the number of toys it makes to 650.

“We are looking for the company to have a solid, rebuilding year,” Amerman said.

Last year was difficult for the toy industry, as children and their parents shunned most expensive electronic toys and chose simple toys instead. Mattel lost $113 million last year, as sales of once-popular toys, such as Masters of the Universe action figures, continued to melt. The company sold $80 million of the Masters of the Universe toys, down from $400 million in 1985.

As profits fell, Amerman was busy shrinking the company. He cut 500 jobs at the company’s headquarters in Hawthorne and shut down six toy factories in Taiwan, Canada, the Philippines and the United States to shave costs. By June, Mattel will have closed four more factories, Amerman said.

Income Up

He doesn’t plan to shift much production to outside contractors, as other toy makers have done. “We are using our plants more efficiently,” he said.

Partly a result of the cutbacks, Mattel reported improved first-quarter profit on Thursday. The company said it earned $254,000, up from $18,000 a year ago.

At the same time, sales declined in the first quarter, to $188.6 million from $211.8 million. The sales drop results in part from a decision to ship expensive toys later in the year, Amerman said. He said he expected sales this year to at least match the $1 billion reported for last year.

Amerman said that electronics is still important to Mattel, despite disappointing sales last year of Captain Power, a space-age boy’s action set that features an infrared “laser” gun. The centerpiece of the toy was a spaceship that fired “laser” beams at enemy ships on the Captain Power television program. The enemy ships fired back.

Sales of Captain Power last year were about $60 million, below expectations. The toy suffered from competition from video games and massive order cancellations by jittery retailers after the stock market crash last Oct. 19, Amerman said.

Orders for the toy were disappointing this year, Amerman said, because unsold toys from last Christmas are still on retailers’ shelfs. “We didn’t sell through our product last year,” he said. “When that happens, it’s very difficult to have a good second year.”

Wheel of Fortune Toy

Amerman said orders were encouraging for Mattel’s new electronic toy, a Wheel of Fortune game that allows the user to play along with the television game show. He said video games shouldn’t hurt Wheel of Fortune sales, since the game is targeted at game-show viewers.

Teen-age boys are big buyers of video games.

Amerman said that despite Captain Power’s problems, electronic toys fit Mattel’s strategy of focusing on toys that have lasting consumer appeal. “Interactivity as it relates to television is going to be with us a long time,” Amerman said. He said the day was approaching when television viewers won’t “remember what it’s like to watch a blank TV screen.”

A quick survey of toy merchants shows California Dream Barbie, with her surf shop and polka-dot bikini, leading the list of Mattel toys. Another toy, Boglins, ugly hand puppets said to be “straight from the swamp,” surprised merchants.

“We can’t keep them on the shelves,” says James Pojas, a manager at Don’s Toys in Glendale.

But early indications are that Mattel might face resistance with its big-ticket toys, especially Captain Power. One large toy wholesaler, Bercor Distributing, didn’t order Captain Power after disappointing sales last year.

Bercor, which supplies toy, drug and grocery stores in the West, says it didn’t order Mattel’s Wheel of Fortune game, either. At $60, the game is just too expensive, says Bill Berman, vice president for toy purchasing.

Toy merchants looked to Mattel’s preschool line, which features Mickey Mouse and other Walt Disney Co. characters, to boost sales when those toys arrived in stores this fall.