Mattel Stocks fell further behind rival Hasbro following second-quarter earnings results that showed revenue beating Wall Street estimates but profits missing forecasts. Mattel reported net sales of $1.12 billion, exceeding the $1.10 billion analyst estimate compiled by the London Stock Exchange Group, while adjusted earnings per share landed at just 1 cent versus the 4-cent consensus. The profit shortfall stemmed from a 260-basis-point decline in adjusted gross margin to 48.6%, driven by tariffs, inflation, higher royalty expenses, and unfavorable currency movements, alongside a 57% year-over-year surge in advertising and promotion spending. Mattel shares remain down 25% year-to-date, while Hasbro stock trades near 143.75 on a rebased index versus Mattel at 77.8, reflecting the widening performance gap between the two toy manufacturers as Hasbro's digital gaming and licensing strategy continues delivering stronger returns.
Mattel Reports Margin Compression From Tariff and Marketing Costs
Adjusted operating income fell 60% from the prior year as advertising and promotion spending jumped 57%. Mattel pointed to tariffs, inflation, higher royalty expenses, and unfavorable currency swings as the primary drivers of the margin decline. Mattel shares rose about 1% in after-hours trading following the earnings release.
CEO Ynon Kreiz defended the underlying strategy despite the profit miss, stating: "We continued to execute our multi-year strategy to grow our IP-driven play and family entertainment business in the second quarter with strong growth in net sales."
Mattel reaffirmed its full-year guidance, expecting $1.27 to $1.39 in adjusted earnings per share and sales growth of 3% to 6%. That outlook excludes any benefit from potential US tariff refunds.
Jefferies analysts called the revenue outlook increasingly achievable given a solid first half and steady consumer demand. They cautioned that tariff pressure and heavier brand spending could still limit how much of that growth reaches the bottom line.
![Mattel stock performance vs Hasbro and the S&P 500]()
Mattel stock performance vs Hasbro and the S&P 500. Source: Reuters
Hasbro Raises Annual Forecasts on Digital Gaming Strength
Hasbro raised its annual revenue and profit forecasts last month, citing resilient digital gaming demand and continued strength in Magic: The Gathering. A Reuters chart tracking shares since October 2024, rebased to 100, shows Hasbro trading near 143.75 and the S&P 500 at 144.93, while Mattel slipped to 77.8.
Hasbro holds the Marvel toy license. Spider-Man: Brand New Day opened to a record $360 million domestic weekend, topping Avengers: Endgame, positioning Hasbro's action-figure lines to capture demand from the film's success.
A Mattel executive told analysts on the earnings call that the company's own intellectual property, partner brands, and digital games are becoming central to its growth plan.
FAQ
What were Mattel's second-quarter earnings results?
Mattel reported second-quarter net sales of $1.12 billion, beating the $1.10 billion analyst estimate compiled by the London Stock Exchange Group. Adjusted earnings per share came in at 1 cent, missing the 4-cent consensus forecast.
Why did Mattel's profit margin decline in the second quarter?
Mattel's adjusted gross margin fell 260 basis points to 48.6% due to tariffs, inflation, higher royalty expenses, and unfavorable currency movements. Advertising and promotion spending increased 57% year-over-year, contributing to a 60% decline in adjusted operating income.
How does Mattel stock performance compare to Hasbro?
Mattel shares are down 25% year-to-date. On a rebased index starting in October 2024 at 100, Mattel trades at 77.8 while Hasbro trades near 143.75 and the S&P 500 sits at 144.93, according to Reuters data.
