Yahoo Finance Lego's success could teach Mattel a couple things
As earnings season winds down I'm looking at toys today. This is as much a case study in management as it is a trade.
First the competing narratives. The two kings of toys in the United States are, of course, Hasbro (HAS) and Mattel (MAT). The fortunes of those two companies couldn't be more different.
You can see on the one year chart that Hasbro is taking the tiny plastic GI Boots to the maker of Barbie over the last 52 weeks. Hasbro, which in addition to GI Joe also owns My Little Pony, was reportedly considering a bid for Dreamworks (DWA) animation late last year but got smart and decided to stick to its knitting. Now the closest they plan to get to making movies is releasing Star Wars toys.
Things couldn't be more different at Mattel. While just about the same market cap size as Hasbro, Mattel has spent much of the last year complaining that Barbie isn't hip anymore and kids no longer like to play with toys.
So who's right? Well the NPD group says the toy industry is growing 5% a year and hit $18 billion last year. One billion of that came from a little company out of Denmark where "Everything is Awesome" -- Lego.
The privately held company reported annual sales up 13% and profit growth of 15%. In times of scary globalization it's important to remember that business is a universal language. When you're Lego, meaning you're well managed and churning out product customers want, you take share in strong economies. When you're Mattel you whine about Barbie being out of style.
While you can't invest directly in Lego the lesson applies to all businesses and that is worth noting in what remains of this earnings season and any future one as well.
