Toy-maker Mattel is struggling to sell baby gear, nursery products and even its beloved Barbie dolls as the full impact of the Trump administration’s tariff policy takes its toll on the El Segundo, Calif.-based company. Retailers have been less inclined to make orders amid levy turmoil, according to Mattel’s CEO Ynon Kreiz, who pointed to the upcoming holiday season and new intellectual property opportunities as promising bright spots during his company’s third-quarter earnings call yesterday (Oct. 21).
Mattel’s shares are down by more than 3 percent after it missed Wall Street’s expectations on revenue and profit for the July-September quarter. Its sales fell by 6 percent year-over-year to $1.7 billion during the period, while its net income declined by 25 percent to $278 million.
Amid economic uncertainty fueled by the Trump administration’s unpredictable tariff policy, major retailers like Walmart and Target have scaled back toy orders in recent months. This slowdown has left Mattel with a buildup of unsold inventory—$827 million worth, up $89 million from a year earlier.
The revenue hit has been particularly sharp in Mattel’s core markets. U.S. sales fell 10 percent, and North American sales dropped 12 percent, reflecting a “significant shift in retailer ordering patterns,” Chief Financial Officer Paul Ruh told analysts. The region accounts for the bulk of Mattel’s business, though the company did see a modest 3 percent uptick in overseas demand.
Mattel is less reliant on foreign manufacturers than other toy-makers, producing around 40 percent of its products in China, compared to the industry average of 80 percent. But it has still been forced to raise prices in response to tariffs. Those increases began at the start of the third quarter and will continue through the end of 2025, according to Ruh, who sought to reassure analysts that future cost increases will be limited. “Let me make it clear: we are not intending to take additional prices this year,” he said.
Holiday hopes
Mattel’s earnings miss doesn’t mean its toys won’t make it under Christmas trees this year. Orders have picked up significantly since the beginning of the fourth quarter as retailers prepare for the gift-heavy season, said Kreiz. The company expects full-year sales to rise between 1 percent and 3 percent in 2025.
Even so, two of Mattel’s biggest brands are losing steam. Barbie’s global sales fell 17 percent during the third quarter compared to the same period last year, while Fisher-Price was down 19 percent.
One bright spot is Hot Wheels, and it’s not just kids driving demand. The model cars generated 8 percent more revenue year-over-year. “We are successfully driving demand across all ages, with adults being the fastest-growing audience for Hot Wheels and over 100 million adults identifying themselves as toy vehicle owners,” Ruh said.
Beyond its toy business, Mattel is doubling down on intellectual property (IP) monetization under Kreiz, who has led the company since 2018. His tenure has been defined by a strategic push into film and television, highlighted by the 2023 blockbuster Barbie.
Mattel’s latest IP venture teams the company with Netflix for a product line inspired by KPop Demon Hunters, the streamer’s summer release that has become its most-watched original film with more than 325 million views. “We were awarded key valuable categories, including dolls, action figures, collectibles, playsets, and that will be another important addition next year,” said Kreiz, adding that presales will begin in November ahead of a full rollout in 2026.
