Mattel Posts Q2 Loss As Higher Costs Offset Sales Growth

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(RTTNews) - Mattel Inc. (MAT) on Tuesday reported a loss in the second quarter, compared to a profit last year, as higher advertising, selling and administrative expenses, along with tariff-related costs and inflation, offset the benefit of higher sales.

The toy maker posted a net loss of $18.2 million or $0.06 per share for the second quarter, compared with net income of $53.4 million or $0.16 per share in the prior-year period. Adjusted earnings were $0.01 per share, down from $0.21 per share a year ago.

Net sales increased 10% to $1.125 billion from $1.019 billion last year, driven by 12% growth in North America and 9% growth internationally. On a constant-currency basis, sales rose 9%.

Reported gross margin declined to 48.2% from 50.9%, reflecting the impact of tariffs, inflation, higher royalties and unfavorable foreign exchange, partly offset by cost savings and tariff mitigation actions.

For the quarter, worldwide gross billings in Vehicles climbed 14%, led by Hot Wheels, while Action Figures, Building Sets, Games and Other surged 35%, supported by digital games and theatrical releases. Dolls billings declined 5%, primarily due to weaker Barbie sales, while Infant, Toddler and Preschool billings fell 11% on lower Fisher-Price demand.

Paul Ruh, CFO of Mattel, added: "Mattel achieved further savings from our three-year Optimizing for Profitable Growth program, which is on track to achieve $225 million of savings by year-end. In line with our capital allocation priorities, we are making strategic investments to accelerate growth and repurchased another $100 million of shares in the quarter, bringing the year-to-date total to $300 million of shares, and we continue to expect repurchases of $400 million in total this year, while maintaining a strong balance sheet."

Looking ahead, Mattel reaffirmed its fiscal 2026 guidance, continuing to expect constant-currency net sales growth of 3% to 6%, adjusted gross margin of about 50%, and adjusted earnings of $1.27 to $1.39 per share.