Mattel Reports Higher Third-Quarter Profit and Operating Income

The Tip Desk · November 6, 2026 · 4 min read

Third-quarter net sales were $1,807 million, up 4%, as $88 million of tariff refunds lifted gross margin to 54.8% and operating income to $476 million.

Mattel, Inc. (MAT), the global toy and family-entertainment company, reported third-quarter 2026 net sales of $1,807 million, up 4% as reported and 3% in constant currency from a year earlier, after a 10% reported increase in the second quarter.

The bigger turn was in profitability. Reported gross margin expanded to 54.8% from 50.0% a year earlier, and adjusted gross margin rose to 55.0% from 50.2%, a 480-basis-point gain the company said was primarily driven by $88 million of tariff refunds received. That reversed a 270-basis-point reported-margin decline in the second quarter and a 450-basis-point decline in the first. Inflation and higher royalties more than offset other benefits, including the contribution of Mattel163, cost savings, and favorable foreign exchange, the company said.

Operating income was $476 million, an increase of $96 million, and adjusted operating income was $502 million, up $106 million. The second quarter had produced operating income of $11 million and a net loss of $18 million; the first quarter had produced a reported operating loss of $103 million. Net income in the third quarter was $354 million, or $1.23 a share, compared with $0.88 a share a year earlier. Adjusted earnings were $1.30 a share versus $0.91. The company said the increase in reported and adjusted operating income was primarily driven by higher gross profit, partly offset by higher advertising expenses. Advertising and promotion expenses were $143.3 million, up 21% from the year-ago quarter.

North America sales rose 4% as reported and International sales rose 5%, the company said. Hot Wheels continued its strong performance, with gross billings up 7% as reported and 6% in constant currency. Vehicles gross billings were $680 million, up 9% as reported, or 7% in constant currency, primarily driven by growth in Hot Wheels. Dolls gross billings were $703 million, up 4% as reported and in constant currency, primarily driven by partner brands including the addition of KPop Demon Hunters, mainly offset by a decline in Barbie. Infant, toddler, and preschool gross billings were $221 million, down 16% as reported, or 17% in constant currency, primarily due to a decline in Fisher-Price. Action figures, building sets, games, and other gross billings were $451 million, up 12% as reported, or 11% in constant currency, primarily driven by growth in games (including the contribution of Mattel163) and action figures.

Chairman and CEO Roger Lynch said his first few weeks leading Mattel had reinforced his belief in the company’s potential and that he also saw clearly where the company must improve. He said priorities are to strengthen brands and win in toys, drive innovation and creativity, and invest with discipline to drive profitable growth. The company announced Steve Totzke as president and chief operating officer.

For the full year 2026, Mattel now expects net sales growth in the range of 1% to 4% in constant currency, adjusted gross margin of roughly 48%, adjusted operating income of $500 million to $570 million, and adjusted EPS of $1.05 to $1.20. That outlook was revised after the second-quarter release had reiterated 2026 guidance. The company said the revised full-year guidance excludes the benefits of tariff refunds recognized year-to-date, as well as any additional tariff refunds that may be recognized during the remainder of 2026. Foreign exchange is expected to have a roughly 1% benefit on full-year net sales based on current spot rates, and the adjusted effective tax rate is expected to be roughly 23%.

For the nine months ended September 30, 2026, cash flows used for operating activities were $114 million, compared with a use of $203 million, primarily due to favorable working capital, partially offset by a decrease in net income excluding non-cash items. Cash flows used for investing activities were $250 million, primarily due to cash paid in connection with the acquisition of Mattel163 net of cash acquired, and higher capital expenditures. Mattel used $308 million of cash for share repurchases in the first nine months, compared with $412 million in the prior-year nine months. Roughly $1.2 billion remained available under the company’s $1.5 billion share-repurchase authorization as of September 30, 2026.