Mattel Q3 Earnings Call Highlights

Key Points

• Mattel cut its 2026 outlook as consumer demand softened late in the third quarter and continued slowing into the fourth. It now expects constant-currency sales growth of 1%–4% and adjusted EPS of $1.05–$1.20.
• Third-quarter sales rose 4% to $1.81 billion, while adjusted EPS increased to $1.30 from $0.91 a year earlier. An $88 million tariff-refund benefit lifted adjusted gross margin to 55%.
• CEO Roger Lynch plans to focus investment on core toys and stronger growth opportunities: Hot Wheels is nearing $2 billion in gross billings, while Barbie’s performance remains below expectations.

Mattel NASDAQ: MAT revised its full-year 2026 outlook after consumer demand weakened late in the third quarter and continued to decelerate into the fourth, even as tariff refunds helped lift quarterly profit.

On his first earnings call as chairman and CEO, Roger Lynch said the toy maker needs to improve execution and focus investment on its strongest opportunities. He identified Hot Wheels as a model for growth while acknowledging that Barbie’s performance was below expectations.

“We must prioritize, concentrate resources on our greatest opportunities, and translate the strength of Mattel’s brands and capabilities into more consistent financial performance,” Lynch said.

Sales Outlook Revised as Demand Slows

Mattel now expects full-year net sales growth of 1% to 4% in constant currency, adjusted gross margin of roughly 48%, adjusted operating income of $500 million to $570 million and adjusted earnings per share of $1.05 to $1.20.

CFO Peter Griffith said the revised outlook primarily reflects softer-than-expected point-of-sale trends, including a slowdown in the latter part of the third quarter that continued into the fourth. He said the trends were similar across major markets.

Griffith said third-quarter point-of-sale demand was positive but fell short of expectations. Asked whether the slowdown was specific to Mattel or the broader toy industry, he declined to distinguish between the two.

The revised full-year guidance excludes tariff refunds recognized year to date and any additional refunds that may be recognized during the rest of 2026. Mattel also expects foreign exchange to benefit full-year net sales by roughly 1%, based on current spot rates.

Griffith said Mattel has enough product to meet demand across its revised sales range. Retailer inventory has declined from a year earlier, he said, as retailers continue to buy closer to the point of sale.

Tariff Refunds Boost Quarterly Results

Third-quarter net sales rose 4% as reported, or 3% in constant currency, to $1.81 billion. Adjusted operating income increased to $502 million from $395 million a year earlier, while adjusted earnings per share rose to $1.30 from $0.91.

Adjusted gross margin increased 480 basis points to 55%, including an $88 million benefit from tariff refunds. Executive Advisor Paul Ruh said the refunds contributed 490 basis points to the margin. Excluding that benefit, inflation and higher royalties more than offset gains from factors including Mattel163, cost savings and favorable foreign exchange.

Gross billings growth came from vehicles, challenger categories and dolls, partially offset by declines in infant, toddler and preschool products. Ruh said all vehicle brands grew, while doll growth was driven primarily by partner brands, including products tied to Netflix’s K-Pop Demon Hunters, and partly offset by declining Barbie billings.

Action figures and games grew by double digits, including the contribution of Mattel163. Excluding Mattel163, challenger-category gross billings declined, primarily because of the loss of the Pokémon license in the prior year and the timing of retailer orders shifting into the fourth quarter.

By region, gross billings rose 4% in North America, 3% in Europe, the Middle East and Africa, and 15% in Asia Pacific. Latin America declined 3%. Gross billings figures discussed on the call were stated in constant currency.

CEO Emphasizes Core Toys

Lynch said Mattel’s priorities are to strengthen its brands and toy business, drive innovation and creativity, and invest selectively for profitable growth. He described the emphasis on toys as a change in focus rather than a change in strategy, saying strength in the core business supports opportunities in digital products, entertainment and live experiences.

Hot Wheels is Mattel’s largest brand, is approaching $2 billion in gross billings and is on track for its ninth consecutive record year, Lynch said. He also pointed to demand for Mattel Brick Shop building sets and said the company is evaluating capacity around the world to support growth.

Barbie remains a priority, but “the current performance is not where it needs to be,” Lynch said. He plans to focus on the core product offering, innovation and broader appeal among adult fans and collectors. During the question-and-answer session, he said Barbie trends may have improved slightly in the third quarter but remained down year over year.

Mattel will provide more detail on its plans and expects to issue 2027 guidance with fourth-quarter results in February 2027, Griffith said. He declined to affirm earlier commentary about the following year’s performance.

Mattel repurchased $308 million of shares year to date, with approximately $1.2 billion remaining under its current authorization, Ruh said. The company noted that its third-quarter results are preliminary until it files its Form 10-Q with the Securities and Exchange Commission.

About Mattel (NASDAQ:MAT)

Mattel, Inc is a global toy and entertainment company that designs, manufactures and markets a broad portfolio of toys, games and consumer products. Its best-known brands include Barbie, Hot Wheels, Fisher-Price, American Girl, Matchbox, UNO, Masters of the Universe and Thomas & Friends. Mattel also develops entertainment content and licenses its intellectual property for use in consumer products, digital experiences and other media.

Founded in 1945, Mattel has expanded from a U.S.

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