Mattel to Dismiss 150 of Staff at Hawthorne
Beset by falling fourth-quarter sales and profits, Mattel is laying off about 7.5% of its headquarters staff and is taking other steps to improve productivity, it was learned Tuesday.
About 150 middle-level managers will be laid off by Friday, a Mattel spokesman confirmed. About 2,000 people work at Mattel’s headquarters in Hawthorne out of a total work force of 17,500 worldwide, the spokesman said.
Employees were told of the layoffs Monday morning through a letter signed by Mattel President Thomas J. Kalinske.
Kalinske said the layoffs were prompted by a 9% drop in sales and a 46% decline in operating profit for the fourth quarter--a trend that has not yet reversed.
“Those numbers were alarming, since sales had increased 50% in the first half of 1985 and operating profit had increased 66%,” Kalinske said in the letter.
To further improve productivity, the toy maker will reduce overhead and expense spending and will simplify “systems and procedures and reduce duplication of effort to make Mattel a less complex and bureaucratic organization,” Kalinske’s letter said. The company also is focusing on increasing sales in all product categories.
“It has been a difficult decision, but ultimately the health of the company depends on how well we improve our productivity,” the letter said. “That means we must reduce our head count and become a leaner company.
“I am personally asking you for your understanding through this difficult transition period, and for your support,” he said. “Mattel will evolve as a stronger, more focused, more flexible company, positioned to meet the challenge of our formidable competition. Together we will make changes to ensure a more successful future.”
Mattel’s sales and income have been improving since mid-1984 when the company underwent a financial restructuring and shed all of its non-toy operations, including its loss-plagued video game and computer operations.
Although sales and income declined in the fourth quarter, Mattel’s financial results generally improved for the year as a whole.
In 1985, Mattel had sales of $1.05 billion, up from $880.85 million in 1984, while operating profit increased to $151.4 million from $136.9 million in 1984.
Net income for the year was $78.7 million, compared to 1984 pro forma net income of $85.6 million, which gives effect to a $231-million capital investment and an exchange of common stock for debt during the year as if those transactions had happened at the beginning of 1984. Without accounting for those transactions in that way, net income in 1984 was $71.3 million.
Mattel has predicted that sales and earnings will increase in 1986 thanks to new product introductions after a slow start at the beginning of the year.
Mattel’s products also include Barbie, Rainbow Brite, Masters of the Universe, She-Ra, the Princess of Power, Angel Bunny and See ‘N Say Toys. Among the new toys that Mattel is launching are a line of plush animals called Popples, a lifelike My Child doll and the Feel Goods line of talking cats and dogs.
MATTEL AT A GLANCE
Millions of dollars
Year Sales Net Income 1985 $1,050.0 $78.7 1984 880.9 85.6 1983 633.4 17.2
Assets: $735.3 million
Employees: 17,500
Shares Outstanding: 48.2 million
12-mo. Price Range (NYSE):
$17.125. -- $10.75
Tuesday’s Close: $11.375
