Mattel CEO Margo Georgiadis told investors that the ailing toy maker behind iconic brands including Barbie and Fisher-Price would get back on track by placing firmer bets on emerging markets, a faster pace of toy development, and by focusing more on the digital play experience.
“It is time to reinvent this company because of where the world is headed,” Georgiadis told Fortune in an interview ahead of the toy maker’s investor day presentation on Wednesday. “As an industry, we all are challenged to do things differently.”
Georgiadis, CEO at Mattel (mat, -2.21%) since February after steering search giant Google’s (goog, -0.28%) commercial operations in the U.S., faced investors to outline her vision for the toy maker that has struggled in an industry that has largely remained resilient even as consumer spending patterns have hurt many legacy brick-and-mortar shops. Over the past three years, sales slipped from $6.5 billion to $5.5 billion, gross margin tumbled from 53.6% to 46.8%, while net income dropped from $904 million to $318 million. In just the last year alone, Mattel’s shares have shed 28% of their value while the company’s closest rival, Hasbro (has, -0.72%), has gained 29% over the same period. Hasbro earlier this year reported record-breaking sales and is now worth almost $6 billion more than Mattel.
Georgiadis told investors that many of Mattel’s woes were self inflicted. The toy development cycle remains too slow and stagnant for a fast-changing world. Several marquee brands—including American Girl, Monster High and the Disney Princess line (which was ceded to rival Hasbro)—have been managed poorly. There’s also been limited portfolio planning for new initiatives and few efforts to develop brand strategies locally, she further explained.
“We will have to make some tough decisions as we transform the company,” Georgiadis told Fortune. One painful move: Mattel had to slash its lofty dividend payout by more than half to free up some cash for some of Georgiadis’ initiatives. It also now sees 2017 revenue increasing in the low-single digits, down from…