Mattel beat revenue expectations in the second quarter. It didn't matter. Adjusted earnings came in at just one cent per share, crushing the four-cent consensus, and the stock is now down 25% for the year while rival Hasbro climbs higher.
The toymaker posted net sales of $1.12 billion, topping the $1.10 billion Wall Street had penciled in. But tariffs, inflation, and a 57% jump in marketing spend erased the win. Adjusted gross margin contracted 260 basis points to 48.6%. Operating income fell 60%.
CEO Ynon Kreiz defended the strategy anyway, pointing to "strong growth in net sales" and execution of the company's multi-year IP-driven pivot. Jefferies analysts said the full-year revenue outlook remains achievable given solid first-half results and steady consumer demand. They warned, though, that tariff pressure and brand spending could keep profits under pressure even as sales grow.
Hasbro's Different Playbook
Mattel's rival is pulling away. Hasbro raised its annual revenue and profit forecasts last month, citing resilient digital gaming demand and strength in Magic: The Gathering. The pattern across earnings season is clear, companies leaning into digital and licensing revenue are outperforming those tied to legacy physical toys.
Mattel reaffirmed its full-year guidance, expecting $1.27 to $1.39 in adjusted earnings per share and sales growth of 3% to 6%. Apple recently booked a lift from tariff refunds in its own earnings report, but Mattel's outlook excludes any potential benefit from US tariff refunds.
A Reuters chart tracking shares since October 2024 tells the story. Hasbro trades near 143.75, the S&P 500 sits at 144.93, while Mattel has slipped to 77.8. That gap keeps widening.
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