A children’s company is now closing a massive supplier plant as it looks to diversify its production footprint, executives confirmed.
Toy company Mattel has announced that it is closing down one of its tier 1 supplier plants in China.
The company intends to discontinue production at that plant sometime this year, according to a 10-K filing.
Currently, 50% of Mattel’s products are made in China, and that percentage continues to decline, CEO Ynon Kreiz told analysts during the call.
“It’s not so much about geopolitical risk as such, but more about diversifying our footprint and working in different countries and continue to optimize our footprint in terms of cost, fulfillment, services by different suppliers and part of our journey to continue to strengthen our supply chain, which is now a competitive advantage for us,” Kriez said.
Mattel has other principal manufacturing sites in Indonesia, Malaysia, Mexico and Thailand, according to the 10-K filing.
The closure is part of Mattel’s Optimizing for Profitable Growth Program initially announced in Q4 2023.
The three-year program aims to achieve efficiencies and cost savings opportunities in the supply chain through a more diverse manufacturing footprint and optimized geographic sourcing efforts.
In 2024, Mattel expects about $60 million in cost savings as a result of the program.
In Mattel’s Q1 earnings call, CFO Anthony DiSilvestro said that Mattel saw a significant gross margin expansion due to lower inventory management costs, cost deflation in ocean freight and savings from its growth program.
He added that the company expects to continue benefiting from cost savings and from increased production levels.
The company behind Barbie dolls and Fisher-Price toys has been making efforts to diversify and shift its production footprint for a while.
In 2021, Mattel began using dual source manufacturing for certain product lines and started relying more on nearshoring to prevent bottlenecks during peak season.
That same year, the manufacture ceased operations at its Canada plant, according to the 10-K filing.
Earlier in 2019, Mattel closed three plants in Mexico, China and Indonesia.
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Also Read: An Unexpected Retailer Is Now Closing All Stores in Illinois
Other Economy News Today
A massive clothing retailer is now closing all 540 stores in just six weeks after unexpectedly filing for bankruptcy.
Liquidation sales will be held at rue21 outlets across the US as bosses rush to clear the last remaining stock.
The clothing retailer has entered bankruptcy and bosses have announced plans to close all 540 remaining stores within six weeks, reports The US Sun.
It is the third time in less than 25 years the fashion retailer has entered bankruptcy, per Bloomberg.
Court documents seen by Reuters revealed the company has more than $190 million of debt.
The chain has 540 stores across the US and 4,900 workers are set to be impacted.
Outlets are to slam shut within four to six weeks, according to court papers.
Bosses also announced plans to sell the company’s intellectual property.
The company narrowly avoided going into bankruptcy in October 2022.
Chiefs filed for bankruptcy in 2017 as they rushed to clear around $700 million worth of debt.
Bosses shuttered 400 stores as well and renegotiated leases.
Execs identified the rise of online shopping and changing consumer trends as reasons behind the bankruptcy.
Michele Pascoe, the interim CEO, also alluded to the impacts of competition and inflation.
The company also filed for bankruptcy in 2002.
At its peak, the company had more than 1,000 stores across the US.
The chain has dozens of outlets across several states, including Florida, Georgia, Illinois, North Carolina, Pennsylvania and Texas.
The teen fashion retailer is not the only clothing chain that has entered bankruptcy over the past year.
Last month, Express chiefs filed for bankruptcy, and at least 100 stores are set to close.
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