The No. 2 toy company in the U.S. is dealing with tariffs by shrinking its manufacturing operations and leaning into movies starring its biggest brands, chief executive Ynon Kreiz said at an investment conference on Thursday.
“We used to be called a toy manufacturer,” Kreiz said at the UBS Global consumer and Retail Conference in NYC. Now “We have become an IP [intellectual property] company.”
This transition comes as Mattel –second to Hasbro — has been shrinking its manufacturing operations and leaning into licensing its hot properties, including Barbie, Hot Wheels and Uno, collecting royalties on them.
The success of its blockbuster Barbie movie in 2023 spawned a mini pink revolution that Mattel cashed in on as more than 15 other companies made Barbie inspired apparel, furniture, linens, jewelry and even toothbrushes.
At the same time, the El Segundo, Calif.-based firm has closed or consolidated five factories, including a 6th one this year, the CEO said on Thursday.
Mattel’s goal is to reduce its reliance on China – which accounts for approximately 40% of its production – and to develop relationships with other low cost countries.
It currently manufactures in seven countries, including Mexico which is facing a potential 25% tariff after April 2.
But its a 20% tariff on goods made in China that represents an existential threat to the toy industry which makes 80% of its goods in China.
Mattel executives have previously said that tariffis will likely raise the cost of its toys this year. Other toy companies are scrambling to find alternatives to China as well.
“We don’t expect any single country to account for more than 25% of our production,” Mattel chief financial officer Anthony DiSilvestro said at the conference. He did not provide a time frame for these manufacturing goals.
Meanwhile, Mattel is filming two movies “Masters of the Universe” in London and “Matchbox” in Morocco.
“We have 14 other movies and TV products in development,” Kreiz said. “You don’t need a Barbie movie success,” to have a positive impact on the company.
Last year, sales of Hot Wheels products eclipsed Barbie related merchandise, Mattel said.
