00:00Enon, thanks for your time. Let me first get your take on the war in Iran.
00:05It doesn't look like it's going to let up anytime soon. How are you dealing with it at Mattel?
00:12Well, hi, Matt. Thanks for inviting me.
00:14You know, like the rest of the world, we're following developments and we'll see where things go.
00:20We believe over the next few days or a couple of weeks, it will be easier to know where things
00:26are heading.
00:26It feels like it's just constant supply chain disruption.
00:31Perhaps you've gotten more used to trying to tackle it, Enon, after COVID and tariffs.
00:36But now there's this concern. What happens to petroleum-based products like those, like toys that happens at Mattel?
00:42How do you think about hedging higher oil prices? How do you deal with that internally?
00:50Well, supply chain is one of our competitive advantages.
00:54Over the last few years, we continue to diversify and evolve our supply chain and develop a system that is
01:01flexible and modular
01:03and is able to respond and adapt to changing market conditions.
01:07Typically, when supply chain is tested, we stand out.
01:11We stand out and we navigate situations.
01:15It's not that we're insulated, but we have the system, we have the capabilities and expertise to navigate changing market
01:24conditions.
01:25We heard from Donald Trump at the beginning of his second term saying that, you know, maybe kids only need
01:32one or two dolls, not 30.
01:34No one gave the message to my daughters, but we've seen toy prices actually come down in the last few
01:42months.
01:42Obviously, there was a rise when we put the tariffs on.
01:45And I think we've got this brilliantly charted by our economics correspondent, Michael McKee.
01:49But then we've seen drops in December, in January, in February.
01:55We're seeing toy and game prices falling.
01:58Can you explain that drop?
02:02Well, the toy industry is a growth industry.
02:05It grew in 23 out of the last 25 years.
02:09It grew strongly last year at over 6%.
02:13And we saw positive consumer demand for our product in the fourth quarter and the full year, both in the
02:21U.S. and internationally.
02:22So we do see demand for our products.
02:25We saw it last year.
02:27Growth came from both prices, but also of value.
02:32So the industry is healthy.
02:35We know that play is a fundamental human behavior, that parents will always prioritize spending money on their children, especially
02:43when it comes to quality product and trusted brands.
02:45And it's also a strategic category for retailers in that it's driving food traffic and toy shoppers spend more time
02:54in store and typically have a bigger basket.
02:57So it is a strategic category for retailers.
03:00And we expect the toy industry to continue to be resilient, not completely insulated, but resilient in challenging economic times.
03:09And we believe it's a growth industry that will continue to grow over time.
03:13Just on that point, have you seen any change in behavior over the past week and a half?
03:21No, too early to tell, too early to tell.
03:23But as I said, this is an industry that is driven by innovation and big brands.
03:28The importance of big brands is higher than ever in a world of unlimited shelf space and ubiquitous distribution.
03:37This is not just in toys.
03:39It's also in entertainment and other consumer-facing parts of the industry, of the economy.
03:44So big brands are always going to stand out.
03:48And this is exactly the core part of our strategy.
03:51How do we leverage the strength of our brands, the fact that people are proactively looking for opportunities to engage
03:58with our brands,
03:59to create experiences and product that stand out and continue to excite and delight fans all over the world?
04:07How do you do that with Hot Wheels specifically, Enon?
04:11Because Barbie, you know, I see everywhere, and we all watched the movie, and there's no question about where to
04:19pick up those products.
04:20With Hot Wheels and Matchbox, I'm not really sure where to go to get these things.
04:26Sometimes I see them, like, on an otherwise empty shelf at Best Buy, or occasionally they're in the supermarket at
04:33the checkout.
04:33But I don't really see the kind of visibility for those cars that I do for the dolls.
04:41Well, Hot Wheels achieved last year its eighth consecutive record high.
04:48And we expect another strong double-digit growth year for Hot Wheels in 2026.
04:54Hot Wheels is perhaps one of the best representation of our brand strategy
04:59and how we continue to grow our IP-driven play and family entertainment business.
05:04You're seeing innovation in Hot Wheels.
05:06We're expanding play patterns, user demographics.
05:09We're seeing a very large contingent of adult fan and collectors.
05:14We're offering more content, more experiences, stunt shows, the Hot Wheels legend tour, mobile games.
05:23And it's becoming a lifestyle brand.
05:26It's much more than a toy.
05:27It's a lifestyle brand.
05:28And we sell product in 500,000 stores globally.
05:35Hot Wheels is in every single one of them.
05:37And the good news, bad news in what you just described is that in some cases, we cannot keep up
05:43with demand.
05:44There is a lot of excitement around Hot Wheels.
05:47And you should also look at Mattel Brick Shop, which is our Hot Wheels-branded building set play pattern that
05:56is something we launched last year and selling like hotcakes.
06:02We cannot keep up with demand.
06:03It's really about innovation and bringing these brands to life in new ways that delight fans and continue to evolve
06:13and expand the experience beyond the toy aisle.
06:17In the world of innovation, I think the other thing people are quite excited about, Enon, is your partnership, your
06:23collaboration with OpenAI.
06:25When are we going to see our first AI-produced toy, Enon?
06:29When might we get something out of that partnership?
06:34You know, we continue to innovate in different ways and look to embrace technology and benefit from our ability to
06:44find new ways to engage fans.
06:46When it comes to AI, we believe this will be a meaningful addition to how we work, how we innovate,
06:53and how we do things more efficiently, more productively, faster, at lower cost.
06:58In terms of integrating technology and AI into our product and experiences,
07:04we believe that this will represent an exciting way for us to reinvent and amplify existing play patterns
07:13and at the same time do it very responsibly, given the implication of AI.
07:18So we're very mindful of privacy, of safety, and how do we embed and integrate the technology in a responsible
07:27way.
07:27We will be able to share more later this year, but we're very excited by the things we're working on.
07:34And again, it's all down to innovation and changing paradigms and looking at new ways to reach and engage fans
07:43all over the world.
07:45Thank you very much.
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