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Mattel Taps Kraft CEO as New Chief

Retail: The toy maker is expected to name Robert A. Eckert to the post today to replace Jill Barad, who resigned in February.

May 17, 2000|ABIGAIL GOLDMAN | TIMES STAFF WRITER

Mattel Inc. is expected to announce today that Robert A. Eckert, president and chief executive of Kraft Foods Inc., is the new chairman and chief executive of the troubled toy manufacturer.

Eckert, 45, spent 22 years at Kraft, where he is known for marketing innovations and an ability to turn around poorly performing brands--skills that will be critical at Mattel.

"Mattel had often compared itself to the consumer-products companies, including Kraft, so it's fitting that they would choose a CEO with that kind of background," said toy industry analyst Sean McGowan of Gerard Klauer Mattison in New York. "The industry doesn't matter as much as experience in dealing with tough challenges."

Kraft announced that Eckert resigned his posts Tuesday. Eckert couldn't be reached for comment.

With $17.5 billion in annual sales, Kraft is more than three times the size of El Segundo-based Mattel. Kraft, whose brands include such household staples as Velveeta cheese, Oscar Mayer meats, and Jell-O gelatin, is a division of food and tobacco giant Philip Morris Cos., the world's biggest consumer-products company.

Eckert frequently has been mentioned as the likely successor to Philip Morris Chief Executive Geoffrey C. Bible, who reaches retirement age in two years.

At Mattel, Eckert replaces Jill Barad, who resigned under pressure in February. She presided over a disastrous acquisition that resulted in Mattel's first annual loss in more than a decade and saw its stock price tumble by more than 70% since November. Mattel shares rose 31 cents, to $11.25, in New York Stock Exchange trading Tuesday.

Among Eckert's early tasks will be to determine what type of presence--if any--Mattel will have in the fast-growing market of technology-oriented toys. Mattel still is reeling from its $3.5-billion acquisition of software maker Learning Co. in 1999. Barad bought Learning Co. to expand Mattel's reach in the entertainment and high-tech sectors.

But only months after the deal was completed, a host of internal problems surfaced at Learning Co. that, alongside a shrinking market for CD-ROMs, caused the unit to report large amounts of red ink. Its top two officers resigned, Mattel's stock plunged, and Barad and Mattel President Ned Mansour departed not long thereafter. Mattel now is trying to sell Learning Co., which some analysts believe may fetch as little as $200 million.

One area for improvement on the technology front is beefing up Mattel's online sales efforts. Like many manufacturers, Mattel has struggled with a desire for a strong online presence, but not at the expense of retailers that sell its products. The company has settled for a middle-of-the-road strategy that has it promoting collectible toys not available in stores.

Eckert also is faced with troubling issues in Mattel's traditional toy business. Several of the company's top brands, including Barbie, Cabbage Patch Kids and Sesame Street products, were disappointments in 1999. Those three lines were behind a 3% sales dip in Mattel's infant-preschool and girls divisions last year.

Although sales in those divisions are tracking up more than 15% this year, analysts warn that neither division is likely to be able to sustain that kind of growth.

The only bright spots for the company are its Hot Wheels and Matchbox unit, which saw sales grow 6% in 1999, and its entertainment group, where sales rose 11% on the strength of licensed toy sales tied to the "Toy Story 2" movie.

Mattel's new chief also faces management ranks wracked by departures.

"The basic challenge at Mattel is one facing any company in the industry--relatively slow growth with increasing pressure from competing industries like software," McGowan said.

Eckert joined Kraft Foods in 1977 and served as general manager for the cheese division, president of the company's Oscar Mayer unit and group vice president at Kraft. He was named president of the food division, the nation's largest maker and marketer of packaged foods, in 1997.

He came to that post with the reputation of a marketing whiz and turnaround expert, responsible for bringing lackluster cold cuts into the Modern Age by introducing fat-free products and the Lunchables line, which now contributes $750 million to the company's annual sales. Eckert's decision to cut cheese prices in the early 1990s was likewise credited with rejuvenating that market.

Eckert also is credited with renewing the affection shoppers had with the child who sang the Oscar Mayer theme song in the mid-1990s by spearheading a marketing campaign and talent search, using supermarkets across America.

In an interview in October with Grocery Headquarters, a trade magazine, Eckert talked about the challenges of leading an older company with well-worn brands--some of the same tasks he will face at Mattel.

"We've proved time and time again that you can take a 100-year-old brand and make it relevant to people's lives," Eckert said. "As consumers' needs change over time, the key is in understanding them and making a commitment to evolve brands and categories to satisfy those needs."

At Kraft, Eckert earned $2.05 million in salary and bonuses in 1999, according to Philip Morris' proxy statement. As the top official at Mattel, Barad earned $1.3 million in salary last year. She did not receive a bonus.

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