Mattel NASDAQ: MAT reported first-quarter 2026 results that executives characterized as a “good start” to the year, with net sales ahead of expectations and management reiterating full-year guidance despite a margin headwind tied largely to tariffs, foreign exchange, and inflation.
On the company’s earnings call, Chairman and CEO Ynon Kreiz said Mattel saw “growth in net sales and positive consumer demand” in Q1 and noted “top line acceleration in the Q2 to date” as the company continues executing its strategy to grow an “IP-driven play and family entertainment” business.
Quarter performance: sales up, margins pressured
CFO Paul Ruh said net sales rose 4% as reported and 1% in constant currency to $862 million, which he described as “ahead of expectations.” Adjusted earnings per share declined by $0.18 to a loss of $0.20.
Profitability metrics weakened in the quarter. Ruh said adjusted gross margin declined 460 basis points to 45.1%, “primarily due to the gross cost impact of tariffs” included in guidance, along with “unfavorable foreign exchange and inflation.” He broke down the margin impact as:
- 240 basis points from the gross incremental cost of tariffs
- 140 basis points from unfavorable foreign exchange
- 90 basis points from inflation
He added that tariff mitigation actions and savings from the company’s Optimizing for Profitable Growth (OPG) program provided a 30-basis-point benefit, partially offset by other factors.
Adjusted operating income was a loss of $70 million compared with a loss of $8 million a year earlier, driven by “higher advertising expenses, lower adjusted gross profit and higher adjusted SG&A,” Ruh said. Adjusted EBITDA was a loss of $12 million compared with a gain of $57 million in the prior-year quarter.
Category and regional trends: vehicles strong; dolls and Fisher-Price softer
On a constant-currency basis, gross billings increased 2% in Q1. Ruh said Mattel’s global point-of-sale (POS) was up mid-single digits, while vehicles posted a 13% increase, with Hot Wheels and Disney and Pixar’s Cars both growing double digits.
By contrast, dolls declined 11% “due to Barbie,” partially offset by Monster High growth, while infant, toddler, and preschool (ITPS) declined 18%, “primarily due to Fisher-Price.” Ruh noted Little People grew double digits within Fisher-Price.
Ruh said “challenger categories collectively increased 17%,” and games grew led by UNO, including a partial-quarter contribution from Mattel163. He also pointed to strength in action figures tied to owned and partner properties and said Mattel Brick Shop “performed exceptionally well as it continues to expand following a successful launch.”
Regionally, international gross billings were up 8%, with growth across EMEA, Latin America, and Asia Pacific. North America gross billings fell 4%, which Ruh attributed to a “shift in U.S. retailer ordering patterns from direct import to domestic shipping.” He said those ordering patterns now appear to be stabilizing and that Mattel expects North America to grow in Q2.
Kreiz told analysts that several brands delivered double-digit growth, naming Hot Wheels, UNO, Monster High, and Masters of the Universe ahead of its film release, as well as partner brands including Toy Story and WWE.
Entertainment, digital, and product initiatives
Mattel highlighted progress on its digital strategy and its broader slate of IP-driven initiatives. Kreiz said the company closed its acquisition of full ownership of mobile game studio Mattel163 and described the integration as “tracking according to plan.” The acquisition, he said, “meaningfully strengthens our digital games business” by adding development, publishing, and digital customer acquisition expertise.
Kreiz said Mattel’s first self-published mobile game, based on Masters of the Universe, is in soft launch ahead of the movie premiere on June 5. He said the game’s “metrics are where we want to see them.” A second self-published game is “in advanced development,” targeted for release later in the year, with a soft launch planned.
On creative platforms, Kreiz said UNO-branded experiences have launched on Roblox and Fortnite and that Barbie DreamHouse Tycoon on Roblox continues to rank in the top 10 among branded games on the platform. He also cited licensing partnerships such as Pictionary with Netflix and Scrabble with Scopely.
In film, Kreiz said Masters of the Universe will receive wide distribution globally and is supported by a multi-platform marketing campaign “led by Amazon MGM and Mattel.” He said a cross-category product line spanning toys, adult collectibles, apparel, and publishing began rolling out “this past weekend.” He also said Mattel is preparing for the Matchbox movie in October and has other films in development including Hot Wheels, Polly Pocket, Barney, and Rock ’Em Sock ’Em Robots.
When asked about Mattel Brick Shop, Kreiz said early consumer demand is “stronger than we can accommodate” and that Mattel is “chasing demand.” He described the product as leveraging Mattel’s vehicle leadership and MEGA’s building-set capabilities, including “metal parts” and “rubber wheels,” and said the company sees “significant runway” for the line beyond 2026 and 2027.
Capital allocation, cost savings, and guidance
Mattel also highlighted capital allocation moves, including $200 million in share repurchases during the quarter. Ruh said the company has repurchased $1.4 billion of shares since resuming buybacks in 2023, reducing shares outstanding by approximately 21%. He said Mattel still expects to repurchase $400 million of shares in 2026 under its $1.5 billion authorization, expected to be completed by the end of 2028.
On cash and leverage, Ruh said cash at quarter-end was $866 million versus $1.24 billion a year ago, reflecting share repurchases and $75 million in cash used for the remaining 50% of Mattel163 (net of cash acquired), partially offset by free cash flow. Total debt was consistent with the prior year, and the company’s gross leverage ratio was 2.7 times. Retailer inventory declined low double digits year over year, and Ruh said Mattel believes it is “well positioned overall for Q2.”
Ruh said the OPG program delivered $16 million of savings in the quarter, bringing cumulative savings to $189 million. The company continues to target about $50 million of efficiencies in 2026 for total program savings of $225 million between 2024 and 2026.
Guidance for 2026 was reiterated, with one change in how Mattel presents non-GAAP measures. Ruh said that beginning in fiscal 2026 the company is excluding amortization of acquired intangible assets from non-GAAP measures to facilitate comparisons, and it recast prior periods accordingly.
For 2026, Mattel maintained its expectation for constant-currency net sales growth of 3% to 6% and adjusted gross margin of approximately 50%. Ruh said the margin outlook assumes sequential improvement in Q2 (though still below 50% in the quarter) and further improvement in the second half. He also said that at current spot rates, FX would be a 1 to 2 percentage point tailwind to full-year reported net sales.
As part of the recast guidance, Ruh said Mattel expects adjusted operating income of $580 million to $630 million and adjusted EPS of $1.27 to $1.39.
Executives repeatedly addressed uncertainty tied to geopolitics and trade. Kreiz said the war in the Middle East has had “minimal impact” so far. Ruh added that Mattel is “not immune” to potential cost pressure from elevated oil prices but said it is “too early to speculate” and guidance already includes “a range of assumptions and several scenarios.” On tariffs, Kreiz said the company’s guidance assumes actions taken in 2025 will fully offset the analyzed 2026 tariff cost impact and noted the company’s guidance does not factor in tariff refunds “given the uncertainty at this point in time.”
Mattel also noted a leadership change: Kreiz said President and Chief Commercial Officer Steve Totzke will step down effective May 1, and Sanjay Luthra, managing director of EMEA and global D2C, will succeed him as chief commercial officer.
About Mattel NASDAQ: MAT
Mattel, Inc is a leading global toy company headquartered in El Segundo, California. Founded in 1945 by Harold “Matt” Matson and Elliot and Ruth Handler, the company has grown into a major player in the toy and family products industry. Mattel designs, manufactures, and markets a broad range of toys, games and entertainment products under well-known brands, including Barbie, Hot Wheels, Fisher-Price, American Girl, Thomas & Friends, UNO and Matchbox. In addition to its proprietary labels, Mattel holds licenses with global entertainment franchises, partnering with Disney, Warner Bros., WWE and other studios to create character-driven play experiences.
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