Mattel Rises After Winning Back Disney Princess Toys From Hasbro

(Bloomberg) -- Mattel Inc. shares jumped Wednesday after the company won back the license to produce toys based on Walt Disney Co.’s princesses and the “Frozen” movies.

The second-largest U.S. toymaker announced a multiyear global licensing agreement with Disney, saying it expects the new collection to go on sale at the beginning of 2023. The news is a comeback for Mattel, which lost the princess and “Frozen” rights to Hasbro Inc. starting in 2016.

Toy sales have rebounded after tumbling early in the pandemic. Mattel, known for its Barbie and Fisher-Price brands, said in October that it expected full-year sales to increase by about 15%, up from an earlier forecast of 12% to 14%.

“As the worldwide leader in dolls, we look forward to bringing our unique Mattel Playbook approach to brand management, product and marketing expertise, and unrelenting attention to detail and quality to create innovative and inspiring lines for these iconic stories and characters,” Richard Dickson, Mattel’s chief operating officer, said in a statement.

Mattel rose 4.3% to $20.46 at the close in New York. Hasbro fell 6%.

Morningstar analyst Jaime Katz said Mattel’s new deal “signals restored goodwill with the storied Disney brands, which potentially opens up a wider set of license opportunities over time.”

Mattel’s loss of the Disney license six years ago represented a fissure between the toy manufacturer and entertainment companies and contributed to a series of struggles that eroded the stock’s value. Analysts also called the deal a win for Disney, as the company now regains an experienced doll distributing partner to market its princess and Frozen toy lines, while keeping ties with Hasbro for other franchises. 

Jim Silver, chief executive officer of Toys, Tots, Pets & More, or TTPM, a toy review site, said the news highlighted a larger story between Mattel and Hasbro and argued Mattel is better suited to take back the princess line as the company “does fashion dolls very well.” Disney hasn’t produced new princesses that rival the success of those in “Frozen,” he said, and the selection of products had waned.

“Mattel really wanted it back and I’m not sure Hasbro wanted it because it wasn’t as profitable,” Silver said. “Disney likes to play ball with all the major players. They want to do business with Mattel and Hasbro and did an extension of ‘Star Wars,’ as well as Lego. They want companies competing against each other.”

Since Hasbro acquired the line, sales of the princess line dropped more than 60% from a peak of $565 million in 2014 to a current wholesale value of less than $200 million, according to estimates from Jefferies Financial Group analyst Stephanie Wissink.

“Mattel is executing at a higher level than Hasbro,” said Gerrick Johnson, an analyst at BMO Capital Markets, on Wednesday. “The roles have reversed.”

Hasbro didn’t respond to a request for comment about losing its rights to the princesses. The company said Wednesday that it has renewed its license for Disney’s “Star Wars” franchise and signed a new agreement with the filmmaker to develop “Indiana Jones” toys.

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