Mattel's Plus Size Barbie Steps Out, Sales Gains Expected

Mattel (MAT)  has announced that they will produce a new line of action series toys while continuing to count on Barbie sales with the launch of its plus size supermodel Ashley Graham doll, as it nears the end of its first full year without the Disney (DIS) princess collection.

In January, Disney gave Mattel competitor Hasbro (HAS) the rights to its Disney Princess brand. Mattel had sold Disney princess dolls since 2000. The introduction of the Disney princess line of toys helped Hasbro move into the doll making space, largely dominated by Mattel.

While Mattel will focus on its new branding initiative for Barbie to increase sales in 2017 and beyond, the company also has a new licensing deal with Chinese entertainment company UYoung.

UYoung yesterday announced it tapped Mattel to be its "global master toy maker" for its new cartoon action series BattleClaw, expected to launch in China later this month, according to License Global, a publishing service for company licensing deals and announcements.

Earlier this month, Mattel CEO Christopher Sinclair said at the company's Analyst Day that "we're effectively managing our profit and loss and balance sheet as we invest in growth, compensate for significant headwinds and foreign exchange and the loss of Disney Princess."

Analysts surveyed by Fact Set predict Mattel will generate revenue of $5.6 billion for fiscal 2016, slightly lower than the $5.7 billion reported in fiscal 2015.

Other toy brands Mattel expects to help with its growth in the coming years include Disney Cars, set to release its third movie next June, and Toy Story, the fourth movie in the series expected to be released in June 2019, according to Sinclair.

However, Barbie remains a top Mattel profit driver.

In 2013, Barbie sales dropped 13%, then 16% in 2014, prompting the company to start thinking about re-branding. In March, Mattel added curvy, petite and tall body shapes to the collection after introducing 23 new dolls of different races in 2015.

The decline in Barbie sales prior to the company's re-branding efforts can be attributed to the loss of one of the doll's "key" consumers: mothers, according to Mattel Chief Brand Officer Juliana Chugg.

"This was really creating tension in the purchase decision," Chugg said at the Analyst Day. "We needed to reconnect with moms and reaffirm the positive values of the brand in a really fresh and engaging way."

In October, Mattel reported Barbie sales increased 16% year-over-year in the 2016 third quarter.

Now, model and activist Graham joins the Barbie re-branding movement. Mattel announced on Monday that it will be adding a Graham replica doll to its "Sheroes" collection.

Shares of Mattel were slightly lower at $31.98 in late afternoon trading.

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