WEBVTT - Kreiz Says Mattel Anticipated Supply Chain Issues

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<v Speaker 1>This is Bloomberg Business Week with Carol Masser and Bloomberg

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<v Speaker 1>Quick Takes Tim Stinovic from Bloomberg Radio. Well shares of

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<v Speaker 1>Mattel they were up as much as eight percent in

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<v Speaker 1>today's sessions, settling by the close up about six tents

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<v Speaker 1>of a percent. This after the company posted third quarter

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<v Speaker 1>results that exceeded expectations. They're working through their supply chain bottlenecks.

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<v Speaker 1>We want to know more about that, that's for sure.

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<v Speaker 1>Let's get to it and back with us. As Mattel

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<v Speaker 1>CEO non cries he is on the phone in California.

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<v Speaker 1>You know, I'm nice to have you here with us.

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<v Speaker 1>How are you good, Carol, thank you for inviting me

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<v Speaker 1>to the show. Well, it's so nice to have you

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<v Speaker 1>back with us. Lots of questions, Um, what was the

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<v Speaker 1>best of the quarter, What was the worst of the quarter. Well,

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<v Speaker 1>you know, we we had another great quarter with strong

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<v Speaker 1>consumer demand for our products. We achieved growth and gain

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<v Speaker 1>market share, and now for five quarters in a row,

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<v Speaker 1>we expect to continue growing. In the fourth quarter, we

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<v Speaker 1>expect to gain market share and have a strong holiday season,

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<v Speaker 1>and we we are on track to achieve our highest

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<v Speaker 1>fullier growth rate in decades, just increased our guidance for

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<v Speaker 1>the third time this year, so you know, we are definitive,

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<v Speaker 1>performing at the high level and executing on our strategy

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<v Speaker 1>and on a clear path to improve profitability and accelerate

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<v Speaker 1>top line growth. Tim was riveted by my stories of

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<v Speaker 1>growing up with barbies and loving them and inheriting the

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<v Speaker 1>barbies from my older sisters. It was a big deal

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<v Speaker 1>growing up. What what what's being bought? What are families

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<v Speaker 1>buying for their kids? You know, we we really saw

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<v Speaker 1>strong demand across the portfolio. We saw growth in um

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<v Speaker 1>in the barbie, we saw growth in hot wheels, The

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<v Speaker 1>entire U Darlls category grew, the vehicles category was growing,

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<v Speaker 1>and then we saw really really strong growth in our

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<v Speaker 1>action figures category that was up fifty percent in the

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<v Speaker 1>quarter and seventy percent year to date. But this is

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<v Speaker 1>really about the entire portfolio showing strength. We're actually grew.

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<v Speaker 1>Uh we grew market share in our three core categories

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<v Speaker 1>where we are global later, in two of our challenging categories,

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<v Speaker 1>and in each of our four regions. So the performance

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<v Speaker 1>was comprehensive pretty much across the board. You know, how

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<v Speaker 1>were you able to successfully work through supply chain challenges.

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<v Speaker 1>It's been a couple of minutes since we started the interview,

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<v Speaker 1>and it's shocking that we haven't talked about the supply

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<v Speaker 1>chain yet because it is, but it has, it really

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<v Speaker 1>has been dominating every earnings report and every call that

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<v Speaker 1>we hear from companies this quarter. What specifically were you

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<v Speaker 1>able to do in the most recent quarter and what

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<v Speaker 1>are you doing in this quarter to alleviate the pressures

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<v Speaker 1>that you're facing when it comes to the supply challenges. Yes,

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<v Speaker 1>I mean, look, our supply chain and commercial organizations were

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<v Speaker 1>very successful in working through global subvention disruptions in trying

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<v Speaker 1>to meet consumer demand. It's not that we were not impacted,

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<v Speaker 1>but we did anticipate your supply and longer lead times

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<v Speaker 1>in factor that into our planning with very specific mitigating actions.

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<v Speaker 1>And this is really where our scale, expertise and flexible

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<v Speaker 1>supply chain model, which we restructured over the last three years.

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<v Speaker 1>It's plain to our advantage and we are ready for

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<v Speaker 1>a strong holiday season. But do you have barbies and

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<v Speaker 1>hot wheels right now stuck in ships and containers that

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<v Speaker 1>off the coast of the Port of l A right now, Well,

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<v Speaker 1>we actually have sufficient inventory we have the capacity and

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<v Speaker 1>we are ready for you know, for for the season.

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<v Speaker 1>We we we have our writtle orders that we see strong,

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<v Speaker 1>We have our written promotional plans in place, and we

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<v Speaker 1>believe we have the inventor in the capacity to meet

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<v Speaker 1>our our new new guidance for the year and expect

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<v Speaker 1>to have lots of toys under the trees, um for

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<v Speaker 1>for you know, for the holiday season. Well, so let's

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<v Speaker 1>let's dig a little bit deeper into that, you know,

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<v Speaker 1>because one of the things that we've been wondering, and

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<v Speaker 1>we saw it during the pandemic where people were just

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<v Speaker 1>hoarding and buying tons of stuff and stocking their cupboards,

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<v Speaker 1>and companies can do the same thing by doing advance

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<v Speaker 1>buying and just kind of overstocking. Um people do it

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<v Speaker 1>with unit sales or something or certain commodities. You know,

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<v Speaker 1>how much did you kind of overstocked potentially or by

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<v Speaker 1>to make sure that your shelves that you had sufficient

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<v Speaker 1>inventories for this season, Because it sounds like you've got

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<v Speaker 1>or already what you think you're going to need for

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<v Speaker 1>the holiday season where they need to be already that

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<v Speaker 1>you're not worried about it being stuck on on ships

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<v Speaker 1>out and sea. Is that fair to say? Yeah? You know,

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<v Speaker 1>we as I said, this is not that we don't

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<v Speaker 1>see issues. We do work for those challenges and still

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<v Speaker 1>expect to achieve growth in the fourth quarter and growth

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<v Speaker 1>growth in the holiday season. Right we are working very

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<v Speaker 1>closely with our retail partners who look to have the

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<v Speaker 1>right product at the right time with the right retailer.

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<v Speaker 1>We're seeing the man remaining strong and do what we

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<v Speaker 1>can to try and meet all of it. We may

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<v Speaker 1>not be able to meet all of the demand, but

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<v Speaker 1>we do what we can to try and meet and

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<v Speaker 1>still expect to grow in the season. So may not

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<v Speaker 1>be able to meet all the demand on the flip side,

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<v Speaker 1>you know. And is it possible that you over order

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<v Speaker 1>or overproduce at this point, I guess I overproduced for

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<v Speaker 1>you know, and that you're left with stock after the

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<v Speaker 1>holiday season. That's possible to now, we don't believe this

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<v Speaker 1>is the case. If anything, we are chasing demand. The

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<v Speaker 1>man is outpacing capacity right now and we are chasing it. Uh.

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<v Speaker 1>You know, this is what we do. This is exactly

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<v Speaker 1>the core competence of the company. Uh. And we traditionally

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<v Speaker 1>excelled during the holiday season. It does take a lot

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<v Speaker 1>of planning. You know, we create the man and then

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<v Speaker 1>we try to it and we work closely with the

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<v Speaker 1>retailers to care for this demand and be able to

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<v Speaker 1>uh to meet the needs of of our of our consumers.

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<v Speaker 1>We talked earlier this year Enon and the narrative really

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<v Speaker 1>was around the idea of parents and grandparents spoiling their

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<v Speaker 1>kids as a result of COVID lockdowns, hybrid schooling as

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<v Speaker 1>things start to open up, as kids potentially under the

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<v Speaker 1>age of twelve could get vaccinated very soon, are you

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<v Speaker 1>concerned that demand will dry up and kids will start

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<v Speaker 1>doing experiential things rather than buying things. You know, the

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<v Speaker 1>tour industry was expected to grow before the pandemic, and

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<v Speaker 1>and and and and we we believe it is a

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<v Speaker 1>growth category on the other side of the pandemic. It

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<v Speaker 1>is fair to say that the pandemic did stimulate demand,

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<v Speaker 1>but you know, it wasn't all positive. They're also headwinds,

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<v Speaker 1>as we know in terms of supply chain, COVID related lockdowns,

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<v Speaker 1>written closures, and other factors that impeded demand. But that said,

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<v Speaker 1>we haven't just at Mattel, you know, we just we

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<v Speaker 1>haven't just tagged onto the industry. We grew almost double

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<v Speaker 1>the industry growth rate in the quarter UM and and

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<v Speaker 1>near today. In fact, we even accelerated market share gains

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<v Speaker 1>in the third quarter. So we're not you know, we're

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<v Speaker 1>not just riding the wave of COVID related demand, but

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<v Speaker 1>we're actually ahead of the industry and do what we

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<v Speaker 1>can to continue to innovate and create great product that

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<v Speaker 1>inspires and detained and developed children through play. Hey, you know,

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<v Speaker 1>I was both of us, Tim and I were at

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<v Speaker 1>the Milk and Institute Global Conference this past week. It

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<v Speaker 1>feels like a week ago, but it was just the

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<v Speaker 1>earlier this week, and I hosted a panel with Global

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<v Speaker 1>m and A. And one of the things that came

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<v Speaker 1>up is that yes, companies are continuing to do deals.

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<v Speaker 1>We're on track for a record year virtually, perhaps maybe

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<v Speaker 1>even five children. But the other thing that they said

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<v Speaker 1>that's happening a lot of is alliances. And I think

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<v Speaker 1>the partnerships that you do, whether it's w w E

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<v Speaker 1>or with Disney, are important to your growth story. Tell

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<v Speaker 1>me about like the renewed partnership with w w E.

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<v Speaker 1>How does that help Mattel specifically on the top and

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<v Speaker 1>bottom line with with our increased capability and the stronger

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<v Speaker 1>platform that we have built, we have more more capacity

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<v Speaker 1>to uh grow partnerships. This is something that we were

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<v Speaker 1>less focused on in the past given the strength of

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<v Speaker 1>our own catalog, but we now can expand our business

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<v Speaker 1>through the part through these partnerships with with you know,

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<v Speaker 1>with with key players, with very important franchises, global franchises,

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<v Speaker 1>in addition to what we do with our own catalog.

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<v Speaker 1>So the w w E is a great example of

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<v Speaker 1>renewing a long term relationship for a really great action

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<v Speaker 1>figure franchise. And you know, likewise, also we just expanded

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<v Speaker 1>our relationship with Disney for the Pixel movie Light here.

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<v Speaker 1>This is the origin story of Brand's Light here, which

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<v Speaker 1>is expected to be very toy added, very playful, great

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<v Speaker 1>movie um and a lot of really exciting products. We

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<v Speaker 1>have the global licensing rights to develop the toy line

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<v Speaker 1>and expect expect to launch that in the summer of

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<v Speaker 1>So another opportunity for us, another growth growth and liver

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<v Speaker 1>for Matteil leveraging the scale, averaging network of more than

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<v Speaker 1>four hundred and seventy thousand doors where we sell our products.

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<v Speaker 1>You know what I'm wondering about, Mattel Television thirteen shows

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<v Speaker 1>in production, thirty plus or in development new content on Netflix.

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<v Speaker 1>Help us draw the line and help our investors our

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<v Speaker 1>audience draw the line from Netflix content and what kids

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<v Speaker 1>see on the screen and what parents see on the

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<v Speaker 1>screen to the actual moving of products off of shelves

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<v Speaker 1>or or or online. This is about capturing the full

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<v Speaker 1>value of our intellectual property, which which is the mid

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<v Speaker 1>too long term part of our strategy. And what we

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<v Speaker 1>say is that in addition to what we do on

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<v Speaker 1>the toy side of our business, where we see a

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<v Speaker 1>lot of room to grow and improve profitability, we can

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<v Speaker 1>also extend into highly a creative verticals that are directly

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<v Speaker 1>adjacent to the toy industry, all driven by big franchises,

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<v Speaker 1>big brands that's rise above the noise level and can

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<v Speaker 1>become successful a creative businesses in and of themselves. So

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<v Speaker 1>MATEL Film, MATEL Television, our digital gaming business, digital experiences, UH,

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<v Speaker 1>licensing and merchandising music, all our verticals where we can

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<v Speaker 1>participate and have to more value given the strength of

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<v Speaker 1>our catalog. And as you mentioned, Mattel Television is not

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<v Speaker 1>arriving with many shows eight shows this yer alone. Yeah,

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<v Speaker 1>and you know, just got about ten seconds. What's your

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<v Speaker 1>favorite toy? I know is that I always ask you that,

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<v Speaker 1>do you get a new one? I have so many

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<v Speaker 1>favorite stories. Look out for the new Barbee Dreymhouse. Always Drymhouse,

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<v Speaker 1>always a classic. The new Dreymhouse is incredible. Alex Steele's

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<v Speaker 1>daughter wants that I know that all right Universe series.

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<v Speaker 1>In my house, it's all about Thomas and friends. Of

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<v Speaker 1>course it is. Hey, you know, be well and hopefully

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<v Speaker 1>we'll talk to you through the holiday season. In On cries,

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<v Speaker 1>Chairman and chief executive officer at Mattel