The Mattel Inc. logo is displayed outside the headquarters of the toy company known for products such as Barbie and Hot Wheels in El Segundo, California, on June 8, 2023.
Patricio T. Fallon | AFP | fake images
Activist investor Barington Capital is pushing Mattel consider selling its American Girl and Fisher-Price brands, citing poor performance within the divisions.
Mattel shares gained 4% in Friday trading following a letter sent to Mattel on Thursday, which was first reported by The Wall Street Journal. The toy maker's stock is trading at roughly the same level as it was 20 years ago. Barington has an undisclosed stake in the company.
American Girl and Fisher-Price, two iconic brands, are among the most popular in their respective markets.
While the overall market has grown for the type of toys Fisher-Price makes, Barington's James Mitarotonda said in the letter to CEO Ynon Kreiz that Fisher-Price's revenue has fallen from $1.9 billion in 2015 to less of $1 billion in 2023.
Mitarotonda said that if Mattel can't stem the continued erosion at both Fisher-Price and American Girl, which have suffered similar declines, the company “may not be the proper owner of these brands.”
Barington suggested the company should “immediately” explore strategic alternatives for those two segments.
“We believe these brands are now detracting from success in other Mattel segments and harming shareholder value,” Mitarotonda said in a statement.
A Mattel spokesperson said in a statement to CNBC: “We look forward to engaging with Barington as we do with all of our shareholders. We welcome this initial approach and are reviewing their letter.”
The letter also highlighted “excessive” stock-based compensation that was higher than that of a group of peer companies, and claims that Mattel continues to add stock-based compensation to the company's adjusted EBITDA, a practice Barington called “shocking.” “.
Barington also told Kreiz that the company should pause ongoing merger and acquisition efforts in favor of a $2 billion share buyback operation, which would be an expansion of the company's existing share buyback program. , and elevate lead director Michael Dolan to the presidency, a position Kreiz currently holds.
Dolan is the former CEO of Bacardi, IMG and Young & Rubicam, an advertising company.
Barington has done campaigns at Bath & Body Works, Darden Restaurants and Chico's. It was founded in 2000.
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