Mattel shares surged greater than 15% after the toy big mentioned it’s weighing worth will increase for Barbie and different iconic manufacturers due to President Trump’s tariffs on Chinese language items.
even after the corporate mentioned it could increase costs on its iconic toys together with Barbie due to tariffs.
The El Segundo, Calif.-based firm — which additionally makes Sizzling Wheels, Fisher-Worth and American Woman — makes most of its toys in China, which at the moment are topic to 10% tariffs. It additionally has opened factories in Mexico, which could possibly be hit with a 25% tariff that might go into impact March 1. It has factories in seven nations altogether.
However, Mattel mentioned 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 had been down 0.3% within the US, in keeping with Circana. Its fourth-quarter adjusted earnings had been 35 cents a share, versus the 20 cents a share Wall Avenue had anticipated.
The upbeat forecast “consists of the anticipated affect of recent US tariffs on China, Mexico and Canada imports introduced on February 1 and mitigating actions we plan to take, together with leveraging the energy of our provide chain, and potential pricing,” Mattel mentioned in a press release.
Mattel shares on Wednesday had been just lately up 14% at $20.66.
“Pricing is comparatively straightforward to implement within the toy trade as a result of about 80% of the gadgets are new in any given yr,” DA Davidson analysts Linda Bolton Weiser instructed The Submit. “Youngsters need what they need no matter worth.
The analyst added she expects Mattel “will search concessions from suppliers as nicely and so they have lots of energy to barter as a result of they’re so massive.”
Mattel mentioned its earnings per share shall be $1.66 to $1.72 per share in contrast with $1.62 in 2024.
“It seems that Mattel’s mitigating efforts might embody a mix of shifting manufacturing out of China, pricing and provide chain optimization,” in keeping with a UBS analysis word by which the funding banks additionally raised Mattel’s inventory estimate to $29 from $26.
Nonetheless, “Any tariff is dangerous for the toy enterprise,” James Zahn, editor of Toy Insider instructed The Submit.
“The margins are already skinny and retailers are pushing toy producers to eat the majority of it,” Zahn mentioned. “On the finish of the day, costs will go up — there’s no means round that. And, ought to Mexico turn into a goal once more, that can affect Mattel straight as they’ve already nearshored some manufacturing 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 trade continues 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 increase costs nevertheless it received’t assist enhance sagging gross sales of Barbie.
Its signature doll grew by leaps and bounds in latest years, fueled partially 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 Sizzling Wheels.
Gross billings for dolls worldwide had been down 8%, primarily on account of declines in Barbie, the corporate mentioned on Tuesday.