Leigh Drogen

About the Author Leigh Drogen

Leigh Drogen is the Founder and CEO of Estimize. Estimize is an open financial estimates platform which facilitates the aggregation of fundamental estimates from independent, buy-side, and sell-side analysts, along with those of industry experts, private investors and students. By sourcing estimates from a diverse community of individuals, Estimize provides both a more accurate and more representative view of expectations compared to sell side only data. Leigh started his career as a quant trader at Geller Capital, a White Plains, NY based fund where he ran strategies that looked at earnings acceleration and analyst estimate revision models, as well as price momentum and several sentiment indicators. Leigh later went on to be the founder of Surfview Capital, a New York based asset management firm that used many of the same strategies as Geller Capital, with a focus on higher beta names on an intermediate term time frame. His educational background includes focus in economics and international relations, specifically war theory. He is a graduate with honors from Hunter College in New York City. You can contact Leigh by emailing him at Leigh@estimize.com

Why Toymakers Are Leaving Mattel In The Dust

Mattel (NASDAQ:MAT) CEO Bryan Stockton went down with the ship Monday resigning as the toy company pre-announced its abysmal holiday quarter results.

The full earnings report was released this morning. It was just as ugly as Mattel said it would be. Earnings sank 51% from $1.07 per share to 52 cents and revenue slid from $2.11 billion to $1.99 billion. At the time of the announcement contributing analysts on Estimize were looking for EPS of 97 cents and sales of $2.16 billion. The problem for Mattel is that the woes aren’t contained to just this quarter. The company’s outlook is deteriorating too.

The issues start with Mattel’s core products. Barbie makes a prime example. In the third quarter Barbie sales sank a staggering 21%. Barbie and Fisher Price sales have been on the decline resulting in 5 straight quarters of revenue decreases. Money that would be spent on children’s entertainment is shifting from physical toys to gadgets and digital products. That excuse doesn’t let Mattel off the hook though. In September Mattel lost its #1 toymaker status to competitor Lego.

Lego’s popularity surged following the acclaimed Lego Movie. Meanwhile Mattel’s branding has struggled as Barbie dolls have been accused of setting unrealistic body image standards for young girls. The one line where Mattel was having success was Disney (NYSE:DIS) princess toys.

In September Mattel lost its licensing contract to supply Disney princess toys to Hasbro (NASDAQ:HAS). Hasbro will take over production of Disney dolls in 2016. Barron’s estimated that contract to be worth $500 million a year in revenue with half coming from sales related to the animated film, Frozen. With industry trends working against it, tumbling market share, and the loss of its right to make Disney toys Mattel is in rough shape.

Mattel’s folly has been it’s reluctance to adapt to a changing world. The company hasn’t made headway in digital or innovated with physical toys. Hasbro showed that it’s still possible to be successful with toys with its Nerf Rebelle bow. The pink bow launches foam tipped arrows. It was brilliantly marketed toward young girls, capitalizing on the success of The Hunger Gamesbooks and films which star a young female bow-wielding heroine. Lego was able to promote its toys by connecting them to a funny film. Meanwhile Mattel hasn’t done much of anything and it’s getting left behind.

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