Mattel's (MAT) mainline Barbie brand dominated nearly all corners of culture and conversations happening across various circles in 2023 due to the success of Greta Gerwig's Barbie film. The toymaker reported a slight fourth-quarter earnings miss while seeing 16% year-over-year sales growth and raising its 2024 earnings outlook. Will all of this translate into continued success for Mattel in 2024?

Mattel CEO Ynon Kreiz joins Yahoo Finance Executive Editor Brian Sozzi to talk about Mattel's performance in 2023 and the future of certain landmark brands as activist investor Barington Capital pressures the company to either fix or sell off its American Girl doll and Fisher-Price segments in a letter to shareholders.

"As a management team, we always evaluate our portfolio and we would like to have all of our brands grow and be in a strong position. We do have work to do on Fisher-Price, and we are doing it," Kreiz states. "We recently announced a few weeks ago... a leadership change and continue to put our mind and bring our incredible capabilities in design and development, in supply chain, in our global commercial organization that is second to none in our industry, to make sure these brands are positioned for long-term growth."

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Editor's note: This article was written by Luke Carberry Mogan.

Video Transcript

BRIAN SOZZI: Shares of Barbie maker Mattel are in focus on the "Yahoo Finance" platform for very good reason. Mattel reported that sales rose 16% from the prior year in the fourth quarter on strong demand for all things Barbie and Hot Wheels.

But the overall report fell shy of what some on the Street were whispering about. The company is forecasting flat sales this year. But more than 10% earnings growth supported by a new $1 billion stock buyback plan. This as Mattel looks to fend off noted activist investor Barrington Capital.

Joining me now is Mattel chairman and CEO Ynon Kreiz. Ynon, always nice to get some time with you. So a really big quarter for you guys. Barbie sales up pretty significantly, as you would expect given the success of the "Barbie" movie. Can you unpack some of the drivers of that Barbie sales number? Because I think it would go a long way to informing investors on how the brand might do this year.

YNON KREIZ: Yes, Brian. Great to be here. And let me start by saying that it was a very strong fourth quarter for the company with double-digit growth in top and bottom line and significant margin expansion. It was a milestone year for the company, not just the quarter. In addition to the incredible success of the Barbie movie, which we couldn't be more proud of. We extended our leadership in key toy categories and gained significant share overall. And further strengthen our financial position.

You talk about execution. We generated more than $700 million of free cash flow, which is more than 2 and 1/2 times the prior year. So with that, we continue to execute our strategy. As you mentioned, we just announced a $1 billion share buyback program. And believe we're in an excellent position to continue to execute our strategy.

And it wasn't just the "Barbie" movie. Of course, this highlighted much of the success. But there's so much more. The "Barbie" movie itself contributed about $150 million of top line and approximately $90 million of operating income. This is participation in box office and all of the movie-related merchandising and toys.

So this is really an example for one movie in one year. And the potential is exciting for Mattel films and, overall, for our entertainment strategy.

BRIAN SOZZI: Ynon, JP Morgan caught my attention recently. They downgraded Mattel. And they mentioned, there's a wall of worry with investors. Can you outperform what you did last year? Maybe speak to that point. Can you out Barbie "Barbie?" Can you show improving margins in your business this year after the blockbuster year you had last year?

YNON KREIZ: Well, you've been following our story. And you know that we've been consistently executing quarter after quarter, year after year. And growing our IP-driven toy business and also executing on our entertainment strategy.

And this is the approach we've been taking. You will see continued expansion and profit improvement in the margin expansion of our toy business, as we continue to accelerate the execution of our entertainment strategy.

The portfolio has one of the strongest offering of children and family entertainment brands in the world. Our franchises are working. And we continue to execute on that approach. What we guided to in 2024 is to continue to improve profitability, gain market share, and expand our margin. And with that, we believe that we are very well positioned for 2025, where we expect to grow sales and earnings, and continue to position the company for long-term growth.

BRIAN SOZZI: Ynon, you're exactly right. I've been covering your leadership at Mattel pretty much since day one in the company longer than that. And that experience really informed my next comment here. I didn't like that letter that Barrington Capital sent to you. Didn't like it at all.

To me, it came off, as someone or a group that didn't really understand the toy business, didn't appreciate what you've been doing over at Mattel. But I want to go through this tick by tick because you guys came out last night, came out with a new billion dollar program. That team over there suggested you do $2 billion.

Will going to $2 billion hurt your balance sheet? Why not go to that number?

YNON KREIZ: Well, we always welcome feedback from our shareholders and are happy to have a conversation with our investors. We are focused on executing our strategy. And our goals are very much aligned with all of our shareholders to create long-term value.

And without getting into the details of the letter, as a management team, we'll always look for ways to continue to create value and strengthen the company and position it for growth. The $1 billion share repurchase program that we announced is the right amount in our mind that is in sync with our capital allocation priorities, with our balance sheet. And reflects our confidence in the continued execution of our strategy. And that we'll be able to continue to position the company for long-term value creation.

BRIAN SOZZI: The letter also mentioned that this investor Barrington, who didn't reply to several requests for me to comment on this one, Fisher-Price and American Girl should be sold now. These are iconic toy brands.

You walk into a toy store. These are brands parents know. And they have known for many years. Do you think the performance of these brands is holding back the multiple that your stock can afford or receive?

YNON KREIZ: We all been following also. We've been talking and been pretty transparent about both Fisher-Price and American Girl. As a management team, we always evaluate our portfolio. And we would like to have all of our brands grow and be in a strong position.

We do have work to do on Fisher-Price. And we are doing it. We recently announced-- a few weeks ago, we announced a leadership change and continue to put our mind and bring our incredible capabilities in design and development, in supply chain, in our global commercial organization that is second to none in our industry to make sure that these brands are positioned for long-term growth.

And, again, without commenting specifically on a letter or any advice for our shareholders that as I said, we're always open to hearing, we are very focused on execution. We believe we have the right capabilities in the company. And as it relates to these brands, when you talk about Fisher-Price, and you said it yourself, it's a cherished brand. It's one of the most known brands in the industry. It had a strong quarter. It was up double digit. It continued to gain share.

Little People performed exceptionally strong with expanded adult collector line. In 2024, Fisher-Price will expand its core product lines, enter a new segment, extended license, entertainment offering, and continue to exit lower margin segments in order to focus on profitability.

So Fisher-Price is a valued asset. And we are confident in the long-term growth potential of the category as a whole.

BRIAN SOZZI: All right. Very important to hear that from you. And then I know, lastly, Ynon, you have a really, I would say, a key investor day coming up in March, where you're going to outline some new plans and innovation for the year ahead. Anything you can share on what you might share at that event?

YNON KREIZ: Yeah. We're looking to share more of the development and innovation of new product offering. How we think about the evolved playbook of Mattel in terms of design, development. The continued evolution of our entertainment strategy, not just in film, but in the other exciting verticals, where we are looking to participate, such as television, consumer product and merchandise, location-based entertainment, digital, and other experiences that would truly capitalize on the incredible potential and value we have in our iconic brand portfolio.

And it will be much about how do we, as a company, take brands that are timeless and make sure that they are timely, and continue to find cultural moments to engage with consumers, to engage with our fans and position the company for an exciting evolution on the IP strategy.

BRIAN SOZZI: We always appreciate your transparency, Ynon. That's why we have enjoyed following your leadership as Mattel chairman and CEO. Ynon Kreiz, look forward to catching up with you around investor day. We'll talk to you soon.

YNON KREIZ: Thank you, Brian.