Updated Version 2 - Mattel Lowers Annual Performance Expectations, New CEO Faces Multiple Challenges

Update share price information, supplement with analyst comments

Sanskriti Shekhar

Reuters, November 5 - Mattel (MAT.O) sharply lowered its annual sales and profit forecasts on Thursday ahead of the crucial holiday shopping season, increasing pressure on new CEO Roger Lynch as he leads the Barbie maker through weak demand and investor scrutiny.

Toy makers are bracing for weak demand in the key holiday season as the Iran war drives up raw material costs and product prices, while US consumers tighten spending on non-essentials due to rising energy costs and inflationary pressures.

Mattel said sales slowed toward the end of the third quarter and this weakness has persisted into the fourth quarter.

The company’s shares fell around 6% in after-hours trading.

The company is stepping up efforts to transform from a traditional toy maker into a diversified business through its IP-driven strategy, aiming to expand brands such as Hot Wheels and UNO into entertainment, licensing, and consumer products.

“Mattel has very strong brands and a talented team, and I believe this holds great long-term opportunities,” Lynch said on the earnings call.

The company now expects fiscal 2026 sales growth of 1% to 4%, down from its previous estimate of 3% to 6%. It also cut its annual adjusted earnings per share forecast from $1.27–$1.39 to $1.05–$1.20.

The company said the outlook excludes tariff refund benefits recognized year-to-date and any additional refunds that may be received for the remainder of 2026.

Thanks to $88 million in tariff refunds, adjusted gross margin for the third quarter expanded to 55.0% from 50.2% a year earlier.

According to LSEG data, third-quarter net sales rose 4% to $1.81 billion but missed analyst expectations of $1.84 billion. Adjusted earnings per share of $1.30 beat the expected 94 cents.

“The results also highlight uneven business performance. The Hot Wheels franchise remains strong, but Barbie sales are declining, and the Fisher-Price brand continues to struggle,” analysts at eMarketer said.

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In a recent leadership shakeup, the company on Thursday named insider Steve Totzke as Chief Operating Officer.

Earlier this week, former Condé Nast CEO Lynch took the helm after longtime CEO Ynon Kreiz stepped down in October. Amgen executive Peter Griffith (link) became Chief Financial Officer in October.

Meanwhile, shareholders including Ariel Investments (link) and Southeastern Asset Management (link) have urged Mattel to explore strategic options, including potential sale plans.

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