Mattel shares surged greater than 15% after the toy big stated it’s weighing worth will increase for Barbie and different iconic manufacturers due to President Trump’s tariffs on Chinese language items.
The El Segundo, Calif.-based firm — which additionally makes Scorching Wheels, Fisher-Worth and American Woman — makes most of its toys in China, which are actually topic to 10% tariffs. It additionally has opened factories in Mexico, which could possibly be hit with a 25% tariff that would go into impact March 1. It has factories in seven nations altogether.
However, Mattel stated it expects gross sales will improve as a lot as 3% this yr regardless of an general slowdown in toy gross sales final yr – which have been down 0.3% within the US, in keeping with Circana. Its fourth-quarter adjusted earnings have been 35 cents a share, versus the 20 cents a share Wall Road had anticipated.
The upbeat forecast “includes the anticipated impact of new US tariffs on China, Mexico and Canada imports announced on February 1 and mitigating actions we plan to take, including leveraging the strength of our supply chain, and potential pricing,” Mattel stated in a press release.
Mattel shares on Wednesday closed up 15% at $20.84.
“Pricing is relatively easy to implement in the toy industry because about 80% of the items are new in any given year,” DA Davidson analysts Linda Bolton Weiser informed The Put up. “Youngsters need what they need no matter worth.
The analyst added she expects Mattel “will seek concessions from suppliers as well and they have a lot of power to negotiate because they are so big.”
Mattel stated its earnings per share will likely be $1.66 to $1.72 per share in contrast with $1.62 in 2024.
“It sounds as if Mattel’s mitigating efforts could include a combination of shifting production out of China, pricing and supply chain optimization,” in keeping with a UBS analysis notice through which the funding banks additionally raised Mattel’s inventory estimate to $29 from $26.
Nonetheless, “Any tariff is bad for the toy business,” James Zahn, editor of Toy Insider informed The Put up.
“The margins are already thin and retailers are pushing toy manufacturers to eat the bulk of it,” Zahn stated. “At the end of the day, prices will go up — there’s no way around that. And, should Mexico become a target again, that will impact Mattel directly as they’ve already nearshored some production to Mexico.”
President Trump paused 25% duties on imports from Mexico and Canada, however a ten% tariff on items from China went into impact.
About 80% of all toys are made in China and the toy business remains to be hopeful that the Trump administration will carve out an exemption for toys because it did beforehand within the president’s first time period.
In the meantime, it’s not clear when or if Mattel will elevate costs but it surely gained’t assist enhance sagging gross sales of Barbie.
Its signature doll grew by leaps and bounds in recent times, fueled partly by the Barbie film in 2023, however final yr gross sales started to decelerate.
Throughout the essential vacation season, Mattel’s gross sales grew by 1% within the fourth quarter within the US, fueled by motion figures and Scorching Wheels.
Gross billings for dolls worldwide have been down 8%, primarily on account of declines in Barbie, the corporate stated on Tuesday.
