Deals on Hot Wheels
One unexpected bright spot in Mattel’s toy lineup this year is Hot Wheels, the 30-year-old line of die-cast miniature cars. Hot Wheels sales were up 40% for the quarter that ended June 30, easing the impact of a 15% drop in sales of its mainstay Barbie doll line.
Hot Wheels has gotten a big boost from a deal with NASCAR, under which Mattel turns out toys with the auto racing association’s logo. Hot Wheels is also venturing into entertainment licensing for the first time, producing vehicles tied to the Walt Disney Co. film “Armageddon.”
Looking to the future, Mattel sees new opportunity in licensing its own Hot Wheels name to companies that make everything from sporting goods to bedding.
Heading up that effort is Robert McCandlish, a former Chicago Cubs pitcher and current director of boy’s licensing for Mattel. McCandlish, who joined Mattel in 1996 from Fruit of the Loom, is charged with “putting a face to a brand” and extending it beyond the toy aisles into the much broader area of licensed goods: apparel, school products, collectibles.
He’s already overseen introduction of the highly successful NASCAR line. That license gives Hot Wheels more adult appeal, plus it has brought aboard a spokesman in driver Kyle Petty, son of racing legend Richard Petty.
Now McCandlish seeks to broaden the scope of Hot Wheels in other ways. He estimates that about a third of licensed goods will be co-branded NASCAR/Hot Wheels products, while the rest will trade solely on the image and logo of the Hot Wheels brand. So far, more than 60 companies, including JEM Sportswear, Mead (school supplies) and Brookfield International (skates and skateboards) have hopped on for the ride.
In a Father’s Day test at Mervyn’s, Hot Wheels merchandise (collector cars, sportswear) was so successful that the 269-store unit of Dayton-Hudson Corp. plans to do a wide promotion for the 1998 holiday season, said men’s gifts and accessories buyer Dave Slifer.
“There’s already a tremendous collectible market for Hot Wheels, so we’re building off of that,” said Slifer.
Mattel’s biggest competitor, Hasbro, has had some success in turning its G.I. Joe and Mr. Potato Head toys into licensed goods, though those characters arguably have less adult appeal than Hot Wheels and NASCAR.
Though licensing fees do not generally bring in as much revenue as when a company manufactures and markets a product itself, McCandlish says he expects the Hot Wheels program to be very profitable. He estimates that this year alone, such products will bring in an extra $100 million in incremental revenue to Hot Wheels sales, which are currently about $300 million (making Hot Wheels the top toy vehicle brand in the world--outpacing Matchbox, which Mattel acquired two years ago).
“Barbie had about a nine-year jump on the boy’s division when it comes to licensing,” concedes McCandlish. But he adds that the appeal of Hot Wheels is even broader than that of the queen of dolls: “With Hot Wheels, I can create a cool leather bomber jacket that adults will want to wear. With Barbie, you’re probably not going to get that [adult appeal],” McCandlish said.
Besides making more money by extending Hot Wheels’ drawing power, McCandlish seeks to make the brand a steadier year-round business. Toys are a very seasonal business, focused mainly in the period leading up to Christmas.
But if McCandlish has his way, you’ll soon have Hot Wheels merchandise in every room of your house.
With action figures somewhat on the wane as boy toys--and kids tiring of traditional toys at ever-younger ages--car lines such as Hot Wheels may have a chance to roar in and take some of that market in boys’ licensing.
