Mattel Sales Accelerate as North America Rebounds
Operating income returned to $11 million despite continued pressure from tariffs and inflation.
Mattel, Inc. (MAT), the toy maker behind Hot Wheels and Barbie, reported a 10% increase in second-quarter sales as North American demand returned to growth.
Net sales reached $1.125 billion, accelerating from 4% growth in the first quarter, while constant-currency growth quickened to 9% from 1%. North American sales rose 12% after declining 3% in the prior quarter. International growth slowed to 9% as reported and 5% in constant currency.
Mattel recorded a net loss of $18.2 million, or $0.06 a share, compared with net income of $53.4 million, or $0.16 a share, a year earlier. Adjusted earnings were $0.01 a share, improving from a first-quarter loss of $0.20 and falling from $0.21 a year earlier. Adjusted operating income declined 60% to $39 million, leaving the adjusted operating margin at 3.4%.
Adjusted gross margin improved sequentially to 48.6% from 45.1%, and its year-over-year contraction narrowed to 260 basis points from 450 basis points in the first quarter. Pressure resulted from tariffs, inflation, unfavorable foreign exchange and higher royalties, partly offset by Mattel163 and tariff-mitigation measures. Advertising expense rose 57% to $124.3 million, or 11.0% of sales.
Vehicles gross billings increased 14%, led by Hot Wheels, and the Action Figures, Building Sets, Games and Other category grew 35%. Dolls declined 5%, primarily because of Barbie, and Infant, Toddler and Preschool fell 11%, primarily because of Fisher-Price. Digital Games contributed to growth following the full acquisition of Mattel163, as Mattel launched its first self-published mobile game and placed another into soft launch.
Mattel reiterated its 2026 outlook, which calls for constant-currency sales growth of 3% to 6%, adjusted gross margin of about 50%, adjusted operating income of $580 million to $630 million and adjusted earnings of $1.27 to $1.39 a share.
First-half free cash outflow narrowed to $327.9 million even as capital spending increased, while net debt rose to $1.81 billion and leverage reached 3.0 times adjusted EBITDA. Mattel repurchased $100 million of shares during the quarter, bringing first-half purchases to $300 million, and maintained its $400 million full-year target.