Mattel Lowers Profit Forecast Amid Careful Consumer Spending

• Fourth-quarter net sales rose only 7% to $1.77 billion, missing Wall Street expectations of $1.84 billion, with adjusted earnings of 39 cents per share also falling short
• The company is acquiring the remaining 50% of joint venture Mattel163 for $159 million and forecasts 3-6% sales growth this year, supported by about $150 million in revenue from the acquisition
• Mattel is expanding its entertainment strategy with upcoming releases including a live-action 'Masters of the Universe' film in June, hoping to replicate the success of 2023's blockbuster 'Barbie' movie

Mattel Lowers Profit Forecast Amid Weak Consumer Spending

Key Financial Results:

Mattel reported disappointing fourth-quarter results and issued 2026 profit guidance below Wall Street expectations. Q4 net sales rose 7% to $1.77 billion, missing estimates of $1.84 billion. Adjusted earnings came in at 39 cents per share, below the expected 45 cents. The company forecasts 2026 sales growth of 3-6%, supported by approximately $150 million from a strategic acquisition.

Market Challenges:

U.S. consumers remained cautious during the critical holiday season, with inflation and economic uncertainty dampening discretionary spending on toys. CEO Ynon Kreiz noted that heavy promotional activity in December pressured margins, while U.S. segment sales grew "less than expected" during the month. The company also announced a $1.5 billion share buyback program.

Strategic Initiatives:

Mattel continues pivoting toward entertainment and digital gaming to diversify revenue streams. Following the success of 2023's "Barbie" blockbuster, the company plans to release a live-action "Masters of the Universe" film in June and a movie on Apple TV in October.

The toymaker is acquiring the remaining 50% stake in Mattel163, a joint venture with China's NetEase, for $159 million to expand its self-published digital gaming portfolio. CEO Kreiz emphasized capturing "full value of intellectual properties in high-margin areas," particularly mobile gaming.

Additionally, Mattel secured a multi-year licensing deal with Paramount Skydance to develop Teenage Mutant Ninja Turtles products starting in 2027.

Market Implications:

The results highlight ongoing pressure on consumer discretionary spending and the challenges facing traditional toy retailers. Mattel's strategic shift toward entertainment and digital platforms reflects industry adaptation to changing consumer preferences and margin pressures.