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Shake-up in Toyland
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March 3, 1999: 7:05 p.m. ET
Stein, Baughman leave Mattel as part of management reorganization
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NEW YORK (CNNfn) - Mattel Inc. announced a major shake-up Wednesday in an effort to revive slumping sales and profits at the nation's largest toymaker.
Mattel said Bruce Stein, the number two executive at the company, and Gary Baughman, president of Fisher-Price, will resign.
It was not immediately clear if the resignations were the result of a clash between the two departing executives and Chairman Jill Barad, but in a statement, the company seemed to indicate that the new management structure left little room for either Stein or Baughman.
"Today we are announcing changes to Mattel's management organization that will result in fewer levels of management," Mattel's Chairman and Chief Executive Jill Barad said. "The new organizational structure we have developed will provide for faster decision making, and encourage action that is entrepreneurial and responsive to change."
"The departure of Bruce and Gary is most painful for me, as I have great respect for both of these men," Barad said. "We wish them the best, and thank them for their enormous contributions to our company."
Troubles for Barbie and Ken
The world's largest toy company has struggled in recent months, due in large part to slumping orders from Toys 'R Us (TOY), its largest distributor. Mattel posted a dramatic drop in fourth quarter profits in 1998, hurt in particular by changes in the way toy retailers order merchandise for the yearend holiday season.
In February, the company reported profits in the fourth quarter, excluding a charge related to a legal settlement, tumbled 67 percent to $59.5 million. Revenue fell 4.3 percent to $1.5 billion.
Mattel has been trying to broaden its product line beyond toys and dolls to include other products, such as educational software. In December, Mattel acquired the Learning Co. for $3.8 billion, adding software such as the Carmen Sandiego, National Geographic, American Greetings, The Print Shop, Riven and Myst to its portfolio.
Under terms of the reorganization, the maker of Barbie and Hot Wheels will be divided into five business units, with the heads of each division reporting directly to Barad.
- Matt Bousquette will head up the Boys/Entertainment business unit, which will include Wheels and other Boys Toys as well as Mattel's Disney and Nickelodeon entertainment businesses.
- The Girls/Barbie unit will be headed by Adrienne Fontanella, who joined Mattel in 1996 and has been responsible for Barbie licensing and collectibles.
- Neil Friedman, president of Tyco Preschool, has been promoted to president of Fisher-Price brands, which will now encompass all Infant and Preschool products, including Disney, Sesame Street, Power Wheels, Magna Doodle, View-Master, See 'N Say and Blue's Clues.
- David Haddad has been promoted to president of Mattel Media, and will also assume responsibility for the company's "Intel Play" branded technology toys.
- Pleasant Rowland will remain vice chairman of Mattel, and president of Pleasant Co. and will help with direct-to-consumer efforts for all Mattel brands.
Stern worked at Sony and Hasbro
Stein, a director at Mattel, has been president of Mattel Worldwide since 1996. Prior to that, he served as president of Sony Interactive Entertainment and president of the Kenner Products Division of Hasbro.
"At this point in my career, I felt I needed a new challenge," Stein said in a statement. "Mattel has an outstanding management team, and is in a great strategic position today. And I am proud of all of my accomplishments at Mattel, particularly in forging long-term marketing relationships and as a creative manager of intellectual property. I am looking forward to putting my expertise in these areas to even fuller use."
Baughman joined Mattel as part of the company's 1997 merger with Tyco Toys.
"I considered retirement at the time of the merger, but am happy that I could serve a role in the successful integration of the two companies," Baughman said. "I plan to work with my successor during a transition period, and then to leave Fisher-Price in very capable hands."
Shares of Mattel lost ground today, dropping 3/4 to 24-3/4 on the New York Stock Exchange.
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