MAT Mattel Inc

Mattel Inc.'s board has started preparing for a CEO transition, hoping to avoid the difficulties the toy maker had the last time it changed leaders.

The biggest U.S. toy company hired the search firm Spencer Stuart this summer to help identify the successor to CEO Christopher Sinclair, according to people familiar with the matter. The recruiter is looking inside and outside the company for the next Mattel leader, the people said.

The board's timeline for making a transition is unclear; Mr. Sinclair has said he plans to see the company through its continuing turnaround effort. Corporations often engage with recruiting firms for long-range succession planning.

"We don't comment on rumors or speculation," Mattel spokesman Alex Clark said. A Spencer Stuart spokesman declined to comment.

Mr. Sinclair, 66 years old, was a retired consumer products executive and Mattel board member when he took command of the company in January 2015. He stepped in on an interim basis when Mattel fired his predecessor amid slumping sales of Barbie and other big brands. He was named permanent CEO three months later, passing over internal candidates.

The current search raises questions about the future of Mattel's No. 2 executive, Richard Dickson, who was named president and chief operating officer when Mr. Sinclair took over. Mr. Dickson, 48, steered an earlier turnaround of Barbie before leaving for a senior role at apparel chain Jones Group Inc. He returned to Mattel in 2014. Mattel had in the past used the COO role as a steppingstone to the corner office. Mr. Dickson declined to comment.

Both Mr. Sinclair and Mr. Dickson are expected to discuss the company's strategy and financial targets at a meeting with investors at the company's El Segundo, Calif., headquarters on Thursday.

Toy industry executives and analysts didn't expect Mr. Sinclair, who has kept his primary residence in Florida and commutes to Mattel's headquarters in Southern California, to hold the CEO position for too long. Mr. Sinclair served as a senior PepsiCo Inc. executive in the late 1990s, and though he'd been on Mattel's board for nearly two decades, he didn't have any experience in the toy industry.

Mr. Sinclair has thrown himself into the role of stabilizing Mattel's operations. Working closely with Mr. Dickson, the company has reversed a long slump in sales at Barbie by adding new body sizes and more diverse skin tones. Barbie sales had fallen more than 10% for eight straight quarters before bouncing back with sales up 23% and 16%, respectively, the past two reporting periods.

Mr. Sinclair also has worked to deepen Mattel's management bench. It hired a new head of human resources, brought in a new marketer to oversee global brands and added a chief content officer to lead the creation of movies and shows that are integral to selling toys.

In addition, he has kept a tight lid on costs and has preserved Mattel's dividend.

"This is not the board guy who's just trying to keep the seat warm," one toy industry executive said.

The turnaround has involved mending a corporate culture that current and former employees felt was in disarray, with days bogged down by endless meetings and lengthy PowerPoint presentations. Some minor changes since the regime change have been cheered by employees, including allowing them to use social media sites at work.

While some brands, like Monster High, continue to struggle, Mattel has largely met carefully laid out investor expectations. Its sales have exceeded expectations in each of the past four quarters, and it has been able to plug the hole from losing a coveted license to make dolls based on Walt Disney Co.'s classic princesses and characters from the movie "Frozen."

Mattel's rebound has corresponded with two of the strongest years for the toy industry in decades. The research firm NPD Group projects that toy sales will rise 6.5% this year, slightly below last year's pace that was aided by the first "Star Wars" movie in a decade.

Mattel investors have been rewarded, as shares—which closed Wednesday at $30.90—have bounced back from a recent low of $19.45.

Write to Joann S. Lublin at joann.lublin@wsj.com and Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

November 02, 2016 18:35 ET (22:35 GMT)

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