Mattel Stock Drops as Tariffs Hit Sales in North America, Earnings Disappoint

Mattel’s Barbie brand dolls for sale at Macy’s in New York City. (Jeenah Moon/Bloomberg)

Key Points

• Mattel’s third-quarter sales decreased 6% year over year to $1.7 billion, missing analyst expectations of $1.83 billion.
• Adjusted earnings per share were 89 cents, falling short of projections for $1.06 per share.
• Gross margin declined to 50% from 53.1% in the prior year, a slide attributed to foreign-exchange rates and tariff costs.

Mattel’s earnings and revenue fell short of expectations, sending the toymaker’s stock lower in after-hours trading Tuesday.

Sales fell 6% year over year to $1.7 billion in the quarter ended Sept. 30, while analysts surveyed by FactSet were expecting sales of $1.83 billion. A 12% sales decline in North America weighed on overall revenue, Mattel said, with many retailers altering their ordering patterns in the wake of changes in trade policy.

“While our US business was challenged in the third quarter by industry-wide shifts in retailer ordering patterns, the fundamentals of our business are strong, with growth in consumer demand for our products across every region,” said CEO Ynon Kreiz.

Orders from U.S. retailers speeded up significantly at the start of the fourth quarter, and the company is expecting a good holiday season with strong revenue growth.

Adjusted earnings per share were 89 cents, worse than projections for $1.06 per share. Gross margin fell to 50% in the quarter from 53.1% in the year-ago quarter, largely thanks to unfavorable foreign exchange rates and tariff costs, among other factors.

Mattel stock was down 7% in late trading. The shares are up 6.2% this year.

The company reiterated its full-year guidance for net sales to increase between 1% and 3%, and for adjusted earnings per share to range from $1.54 to $1.66.

Write to Sabrina Escobar at sabrina.escobar@barrons.com