Mattel's upbeat outlook for the holiday season helps offset disappointing Q3

[Hot Wheels]
AnthonyRosenberg

Mattel (NASDAQ:MAT [https://seekingalpha.com/symbol/MAT]) missed Wall Street expectations on both revenue and profit in the third quarter, [https://seekingalpha.com/pr/20274383-mattel-reports-third-quarter-2025-financial-results] sending shares sharply lower before management’s upbeat comments on holiday demand and “significantly accelerated orders from U.S. retailers” helped pare losses.

“While our US business was challenged in the third quarter by industry-wide shifts in retailer ordering patterns, the fundamentals of our business are strong, with growth in consumer demand for our products across every region,” said Mattel CEO Ynon Kreiz, adding that the company expects a “good holiday season and strong topline growth in Q4.”

While action figures, building sets, and games continued to see strong demand that helped offset declining sales for dolls, and preschool toys, overall worldwide sales were down 6% to $1.73B, missing expectations by $110M.

Profits were down as well, reflecting the unfavorable impacts of inflation, tariff costs, higher sales adjustments, and unfavorable foreign exchange, resulting in a lower-than-expected adjusted profit of $0.89 per share versus $1.14 last year, and compressed the company’s gross margin by 290 basis points to 50.2%.

For FY25, Mattel (NASDAQ:MAT [https://seekingalpha.com/symbol/MAT]) expects sales to increase by 1% to 3% from FY24, translating into a range of $5.43B to $5.54B versus $5.44B estimates, while adjusted EPS is targeted for $1.54 to $1.66 per share versus $1.61 estimates. Adjusted gross margin is expected to decline 90 basis points to 50.0%.

Shares are down 6% in after-hours trading, trimming an initial loss of more than 20%.

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