By Neil J Kanatt
Feb 10 (Reuters) – Mattel shares slumped 28% in extended trading after the Barbie maker’s full-year profit forecast disappointed investors, underscoring how a recovery in toy demand remains elusive as cautious consumers continue to rein in discretionary spending.
The company also missed fourth-quarter profit estimates on Tuesday by a wide margin. CEO Ynon Kreiz told Reuters that heavy promotional activity in December pressured margins, with sales in its U.S. business during the month growing “less than expected.”
Traditional toymakers’ margins have also come under pressure from import tariffs and rising production costs.
Mattel’s cautious tone echoed that of rival Hasbro, which earlier in the day projected muted annual revenue growth even as it beat fourth-quarter estimates.
Despite signs of improving demand for Barbie, Mattel said it expects the iconic doll to return to growth only in 2027.
There were, however, pockets of strength. Vehicles remained a standout, with Hot Wheels posting double-digit growth and solid performances from Matchbox and Disney and Pixar’s Cars lines during the quarter.
Mattel is also pushing to expand its consumer footprint and build an entertainment portfolio around its brands. It hopes to repeat the success of the 2023 blockbuster “Barbie” with a live-action “Masters of the Universe” film in June and the Matchbox movie on Apple TV in October.
“The big question now is whether Mattel’s increased investments can reignite demand, or simply extend the pressure in a highly value-conscious U.S. market,” said eMarketer analyst Zak Stambor.
Mattel expects 2026 adjusted earnings per share of $1.18 to $1.30, below analysts’ average estimate of $1.75, according to data compiled by LSEG.
Adjusted earnings of 39 cents per share in the fourth quarter fell short of the 54 cents estimate, while net sales of $1.77 billion also missed expectations of $1.84 billion.
The company, which unveiled a $1.5 billion share buyback plan to be completed by 2028, said it had fully offset the U.S. tariff cost impact through measures including supply-chain diversification and product optimization.
ENTERTAINMENT PUSH
The company said it would acquire the remaining 50% of Mattel163, a joint venture media games developer created with China’s NetEase for $159 million, as it targets growth in self-published digital gaming.
“Especially when it comes to digital, we see that as an area where our brands lend themselves well to games and mobile games specifically,” Kreiz said.
Supported by about $150 million in revenue from the acquisition, Mattel forecast that sales this year would rise 3% to 6%.
The company also announced a multi-year licensing deal with Paramount Skydance to develop and market Teenage Mutant Ninja Turtles products starting in 2027.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Sriraj Kalluvila)
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