Mattel, the renowned toy-maker, is experiencing challenging times with its iconic Barbie dolls and other baby products underperforming in sales. The company’s latest earnings reveal a dip attributed to external economic factors that include the tariff policies of the previous U.S. administration. This financial downturn occurs as the holiday season approaches, a traditionally active period for toy sales. Nevertheless, Mattel remains optimistic about leveraging new intellectual property opportunities to bolster its performance. Insights about these dynamics can offer new perspectives on the future trajectory of companies facing similar macroeconomic challenges.
In earlier assessments, Mattel had demonstrated resilience against tariff impositions, managing production costs through strategic global partnerships. However, these strategies faced constraints when U.S. retailers like Walmart and Target adjusted ordering practices, reflecting economic uncertainties. The reduction in demand has resulted in increased inventory, now totaling $827 million. This situation highlights a contrast to Mattel’s prior ability to adeptly manage supply-chain disruptions and maintain steady market performances.
How Low Did Mattel’s Profits Dive?
Mattel missed Wall Street forecasts for the third quarter, reporting a 6% year-over-year decline in revenue to $1.7 billion. The firm’s net income also fell 25% to $278 million, with the decline pronounced in its core markets, including a 10% drop in U.S. sales. North American sales, a key revenue driver, decreased by 12%. As Paul Ruh, Mattel’s Chief Financial Officer, noted, this reflects substantial shifts in retailer ordering behaviors, despite a modest increase in foreign demand.
How Are Tariffs Impacting Mattel?
Tariffs have compelled Mattel to increase their product prices, starting from the third quarter and continuing through the end of 2025. While the company sources around 40% of its products from China, Ruh assured that additional price hikes for this year are not planned.
“Let me make it clear: we are not intending to take additional prices this year,”
Ruh elaborated, emphasizing efforts to limit cost escalation.
Despite these challenges, Mattel anticipates better performance during the holiday season. Increased orders have been observed as retailers prepare for festive demand. The company forecasts an annual sales growth of 1% to 3% in 2025. However, iconic brands like Barbie and Fisher-Price reported sales drops of 17% and 19%, respectively. Conversely, Hot Wheels experienced an 8% revenue increase, attributed in part to adult consumers.
“We are successfully driving demand across all ages,”
Ruh shared, identifying adults as a growing demographic for toy vehicle enthusiasts.
Additionally, Mattel aims to expand its focus from traditional toys to intellectual property monetization. The inclusion of film and TV strategies has been a hallmark of Ynon Kreiz’s leadership, marked by the success of the Barbie movie. The company recently collaborated with Netflix (NASDAQ:NFLX) for an upcoming product line inspired by KPop Demon Hunters, a film that garnered over 325 million views. Kreiz noted, “We were awarded key valuable categories, including dolls and action figures.”
Mattel’s current situation reflects a broader industry trend where external policy changes significantly impact market strategies and revenue streams. Adapting to these economic variables while harnessing new revenue avenues through intellectual properties can potentially mitigate traditional business model limitations. Observers may find valuable insights into how such approaches create resilience in ever-fluctuating market conditions.
