Investors hope Robert Eckert's success with the food conglomerate will translate to the world of toys.
Mattel Inc. on Wednesday turned to Robert Eckert, formerly chief executive of Kraft Foods, to revive its battered toy business.
Eckert, 45, replaces Jill Barad, who resigned as chairman and chief executive in February after failing to turn around a troubled software company that Mattel bought for $3.8-billion a year ago. Losses from the software company, the Learning Co., were $183-million in the fourth quarter of last year and erased earnings for Mattel, which makes toys under the Barbie, Hot Wheels and Fisher-Price brand names. As Barad stepped down, the company, based in El Segundo, Calif., reported a loss of $82-million, or 21 cents a share, for the year.
Barad's repeated promises of improvement for the Learning Co. hurt Mattel's credibility with investors. The stock price has lost nearly three-quarters of its value over the last two years, trading at $11 a share in recent weeks, compared with a high of $45.63 in March 1998.
Wall Street applauded the choice of Eckert, under whose watch Kraft has grown faster than the rest of the food industry, which has been in the doldrums. Investors sent Mattel's share price up $1.50, to $12.75.
"What I want to see in a CEO coming into this business is someone with some global branding experience . . . someone who is able to implement some operating efficiencies into the business," said Anthony N. Gikas, an analyst with U.S. Bancorp Piper Jaffray. "He has turnaround experience, and it looks like he addresses all these needs. Certainly the credentials are all in place."
Eckert said his mandate from the board "is to build value for the shareholder," adding that he plans to do that by cutting costs, building brands and developing managers. "I learned how to do that at Philip Morris and Kraft," he said, "and it is challenging to do those three things simultaneously. But when we do that, the company will be back on track with the investment community."
Eckert said a close look at Mattel's profit margins and operating expenses showed room for improvement. "We will take a hard look at manufacturing costs," he said.
He said he left Kraft for Mattel to run what he called "one of the greatest consumer brand names in the world."
Philip Morris, the parent company of Kraft, said Eckert would be replaced by Betsy D. Holden, 44, the executive vice president of Kraft Foods. She and Eckert rose through the ranks at Kraft, with stints in the cheese division and other packaged-food divisions.
One of Eckert's top priorities will be to reassure Mattel employees that the company is getting back on track. The company has been hurt by layoffs, primarily in its Learning Company operations, and the departure of many key executives.
While many executives have announced plans to depart Mattel in recent months, including Pleasant Rowland, the founder of the "American Girl" doll line that Mattel bought in 1998, Eckert said he was pleased with the management team he would be inheriting. "They are doing a wonderful job," he said.
Asked what his management style was, Eckert said: "I try to be just another person." His decision to leave Kraft, he said, came because "it was a time in my life and my career to make a change, and this came along." The prospect of further consolidation in the food business did not affect his decision, he said.
Wednesday, after meeting informally with Mattel employees, he made it his business to quickly read his way through the Harry Potter books, a highly successful series by J.K. Rowling that sold licensing rights for toys to Mattel earlier this year. Hasbro, Mattel's chief competitor, got the rights for trading cards and other novelties.
_ Information from the Associated Press was used in this report.