Global toy leader, Mattel, Inc. (NASDAQ:MAT) dropped -36.37% in the quarter. The company has a portfolio of iconic brands including Barbie, Fisher-Price, and Hot Wheels. Given its scale, MAT is the licensee of choice for large content providers like Disney. The good news is that the company is seeing early success in the turnaround of two core brands despite the short-term headwind caused by the Toys ‘R’ Us bankruptcy. The bad news is the rest of the portfolio is still underperforming. While MAT is attempting to massively overhaul its supply chain, righting the ship will be a multiyear process with many moving pieces. Ultimately, MAT’s long-term success will be determined by execution in the short- to medium-term. The fact that MAT’s leadership has simplified the organization structure and strengthened its executive bench, while also adding new and logical appointees to the Board, gives us confidence in the company’s future. In our view, market participants do not fully appreciate MAT’s long-term potential.
- From John Rogers (Trades, Portfolio)' fourth-quarter 2018 Ariel Fund shareholder letter.
