Mattel Inc. (MAT) recently announced that Robert A. Eckert, who has served as the company’s Chief Executive Officer (CEO) for more than a decade, will step down from his position at the end of the year. Bryan G. Stockton, the Chief Operating Officer (CFO) of the company, will take his position as the new CEO on the first day of the coming year.
Eckert joined Mattel in May 2000 as the chairman and CEO and since then has played a key role in the development of the company and has also navigated Mattel through the economic slowdown quite impressively. Under his leadership, the company achieved new heights in terms of revenue growth, margin expansion, building new franchises, optimizing entertainment partnerships, expanding international footprint and enhancing shareholder value. Eckert will continue to serve as the chairman of the company. Before joining Mattel, Eckert was the president and CEO of Kraft Foods Inc. (KFT).
Following the announcement of the news, the company’s share price fell 63 cents or 2.2% and closed at $27.76 on November 21.
However, we expect the transition to be smooth as the successor of Eckert, Stockton has also been associated with the company for a decade and has held various responsible positions, including the international market duty. Under his guidance, the company's international market sales jumped from 36% to 50%. We believe Mattel, which is the largest toy manufacturer in the world, will prosper under the guidance of Stockton.
In the third quarter 2011 results, net sales of the company grew 9% year over year to $1,998.8 million, driven by strong sales of its core brands Barbie, Hot Wheels and Other Girl Brands as well as robust sales of the company’s entertainment property Cars 2. The company also reported earnings of 86 cents per share, which were in line with the Zacks Consensus Estimate.
The company is all set to drive higher revenue in the fourth quarter of 2011, which is a holiday season and toy companies typically generate a large proportion of their net revenues during this period based on the strong demand for toys.
Mattel currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
Mattel’s primary competitors in the toy industry are Hasbro Inc. (HAS) and JAKKS Pacific Inc. (JAKK).
(We are reissuing this article to correct a mistake. The original article, issued earlier today, should no longer be relied upon.)
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