Barington Capital Proposes Radical Changes for Mattel

In an assertive move, activist investor Barington Capital has recommended Mattel, lower performing brands such as Fisher-Price and American Girl, daringly suggesting they consider divestment options. Our source reveals this information was originally put forth in a letter from James Mitarotonda; a known representative of Barington Capital, addressed to Mattel’s CEO, Ynon Kreiz.

Plummeting Revenues Requires Shift in Strategy

While the toy market on a broader scale continues to expand, it seems Fisher-Price has not been receptive to this success, enduring a staggering loss in revenue. This dramatic fall began in 2015, starting at $1.9 billion, and foreseeably dropping below the $1 billion mark in 2023. The American Girl brand also shares this downward trajectory, sparking concerns about Mattel’s ability to manage these brands effectively. Consequently, Barington proposes an urgent need for strategic alternatives for these declining sectors of Mattel.

Excessive Stock-Based Reimbursements Under Scrutiny

Also on Barington’s agenda was an assessment of Mattel’s current compensation system. Critically, Barington deems Mattel’s use of stock-based compensation as an excessive measure relative to other analogous companies. Issues were also raised regarding Mattel’s practice of incorporating share-based compensation in its adjusted EBITDA.

Strategic Repositioning Advocacy

Barington’s suggestions don’t end there, expressing the belief that Mattel should put a halt its current merger and acquisition strategies. Instead, Barington suggests the company could potentially benefit from enlarging their share repurchase program to $2 billion. Furthermore, they propose installing former CEO of Bacardi, IMG, and Young & Rubicam, Michael Dolan, as chair of the board. This would mean replacing the role currently filled by Mattel’s CEO, Ynon Kreiz.

Barington Capital, well known for activist campaigns, had previously engaged with companies such as Bath & Body Works, Darden Restaurants, and Chico’s post their formation in the year 2000. Observers argue that Barington’s current engagement with Mattel is in line with their previous patterns of behaviour, endeavouring to enhance shareholder value through their direct investment in companies.