The toy business looks simple: make a Barbie doll or Hot Wheels car, send it to stores and sell it. But in 2025, tariffs, supply-chain changes and retailer orders made Mattel’s business much harder.
That matters because Mattel’s shares are now trading around $13.21, roughly the same level they were at in 1995. The latest weakness cannot be blamed on tariffs alone. Mattel is also dealing with weaker Barbie and Fisher-Price sales, higher costs and heavier investment spending. But tariffs became an important extra pressure at the wrong time.
Mattel’s Toy Empire Is Under Pressure
Mattel is the company behind Barbie, Hot Wheels, Fisher-Price, UNO, Matchbox, Monster High and several other brands. It is also trying to become more than a traditional toy manufacturer by making money from content, digital games, consumer products and live experiences.
The tariff problem became serious in early 2025. Mattel paused its full-year 2025 guidance in the first quarter because the US tariff environment had become too uncertain. The company said tariffs had not affected the first-quarter numbers yet, but it was already preparing to change sourcing, product mix and US pricing.
In May 2025 Reuters reported, Mattel planned to increase prices on some US products as tariffs lifted input costs. The US represented about half of Mattel’s global toy sales, while around 20 percent of goods sold in the country were imported from China. Products such as Barbie dolls and Hot Wheels toys were also imported from Indonesia, Malaysia and Thailand, which were caught by reciprocal tariff measures.
Tariffs were not Mattel’s only problem, but they added another layer of pressure at a time when the company was already dealing with several other problems.
Tariffs Hit A Global Supply Chain
Mattel was not completely dependent on China. Management said China represented less than 40 percent of global toy production (Industry Average is 80 percent), while China-sourced imports into the US represented less than 20 percent of global production.
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Still, the company had to move quickly. It planned to relocate production of 500 toy SKUs from China in 2025, compared with 280 relocations in 2024. UNO, for example, was produced in both China and India, and Mattel said it was increasing Indian production for the US while directing more Chinese production toward international markets.
The other lever was price. Mattel said it would take selective pricing action in the US where necessary. If tariffs made importing a toy more expensive, Mattel could absorb the cost, find another factory, change the product mix or pass part of the increase to the customer.
More importantly, tariffs created uncertainty before they fully showed up in Mattel’s income statement. Retailers did not know what tariffs would look like several months later, so some became more cautious about committing to large import orders.
Retailer Ordering Made 2025 Even Messier
Normally, some retailers use direct imports, where they take ownership of toys in the sourcing country and handle importing and warehousing themselves. During the tariff uncertainty, retailers increasingly shifted toward domestic shipping, where Mattel imports and stores the goods first and retailers buy them later in the destination market. For Mattel, that pushed Gross Billings recognition later.
The impact became clear in Q2 2025. Net sales fell 6 percent to $1.02 billion, while North America sales dropped 16 percent. Mattel said tariff uncertainty changed when retailers placed orders. But demand from consumers was still growing, showing that toys were selling even though retailer orders had slowed.
The distortion continued in Q3 2025. Net sales fell 6 percent as reported and 7 percent in constant currency to $1.74 billion, with North America down 12 percent. At the same time, management said consumer demand was growing across every region and US retailer orders had started accelerating into the fourth quarter.
Then came December. Q4 2025 net sales rose 7 percent to $1.77 billion, but US gross billings still came in below Mattel’s expectations. The company used more discounts and promotions to manage inventory, which helped move products but put more pressure on margins.
Barbie Slowed While Hot Wheels Kept Racing
Tariffs were not Mattel’s only problem. The portfolio itself was moving in very different directions. In Q2 2025, worldwide Dolls Gross Billings fell 19 percent to $335 million, mainly because of Barbie. Infant, Toddler and Preschool fell 25 percent to $143 million, driven by Fisher-Price and planned exits from some Baby Gear and Power Wheels products.
Hot Wheels told the opposite story. Vehicle Gross Billings increased 10 percent to $407 million in Q2 2025, primarily because of Hot Wheels. The pattern continued in Q3, when Dolls fell 12 percent in constant currency while Vehicles increased 6 percent.
By Q4, Barbie had improved to flat in constant currency, while Vehicles grew 16 percent, again led by Hot Wheels. Mattel’s latest Q2 2026 results says Hot Wheels is on track for a ninth consecutive record year. It also shows Dolls down 7 percent in constant currency and says management expects Barbie to return to growth in 2027.
That contrast matters. Mattel does not have a problem where nobody wants its toys. Some major franchises are doing very well while others are dragging growth. Barbie remains especially important because management expects the brand to return to growth only in 2027.
Sales Are Recovering But Margins Are Not
The biggest concern in 2026 is no longer simply whether Mattel can grow revenue. It is whether that growth can translate into profit.
In Q1 2026, net sales increased 4 percent to $862 million, but Adjusted Gross Margin fell to 45.1 percent from 49.6 percent. Mattel reported an Adjusted Operating Loss of $70 million compared with a recast loss of $8 million a year earlier.
Tariffs were a major part of that squeeze. Management said the gross incremental tariff cost reduced Q1 Adjusted Gross Margin by 240 basis points. Foreign exchange and inflation added further pressure.
Q2 2026 showed the problem more clearly. Net sales rose 10 percent to $1.13 billion, helped by 12 percent growth in North America. But margins weakened, with Adjusted Gross Margin falling to 48.6 percent from 51.2 percent and Adjusted Operating Income dropping to $39 million. Mattel also reported a net loss of $18 million, compared with a $53 million profit a year earlier.
The company said tariffs, inflation, higher royalties and foreign exchange were the main margin pressures. In other words, the top line is recovering faster than the bottom line.
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Mattel Is Betting On A Broader Comeback
There are signs that some of the 2025 disruption is fading. By Q2 2026, management said the US retailer ordering shift that had affected Gross Billings for four consecutive quarters had largely stabilised.
Mattel is also relying on cost savings, supply-chain diversification and selective pricing to rebuild margins. At the same time, it is investing to turn its brands into broader entertainment franchises. The company completed full ownership of Mattel163 and is expanding digital games and a brand centric model connecting toys, films, games, licensing and consumer products.
For 2026, Mattel is still guiding for constant-currency net sales growth of 3 to 6 percent, Adjusted Gross Margin of around 50 percent, Adjusted Operating Income of $580 million to $630 million and Adjusted EPS of $1.27 to $1.39.
That makes the next few quarters relatively easy to frame. Hot Wheels is already doing its job. US retailer ordering is normalising. The bigger questions are whether Barbie can stabilise, whether Fisher Price can improve and, most importantly, whether Mattel can push Gross Margin back toward 50 percent as tariff costs and other pressures are mitigated.
At around 1995 prices, Mattel is starting to look less like a tariff casualty and more like a comeback bet. The business is still dealing with weaker brands, higher costs and margin pressure, but retailer disruption is easing and sales are recovering. The question now is whether that recovery can finally reach the bottom line, because that is what a real rebound in the stock will ultimately depend on.