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    MAT
    Earnings call· Mar 2026(Q1 FY26)

    MATTEL INC /DE/ Q1 FY26 earnings call MAT

    Apr 29, 2026 Source

    Executive summary

    Mattel Q1 FY26 — Strong Start with Net Sales Growth and Strategic Investments

    Mattel began FY26 with net sales growth driven by strong brand performance and strategic investments in digital games and building sets. Despite gross margin compression from tariffs and FX, the company reiterated its full-year guidance, anticipating sequential improvements and top-line acceleration in Q2, while continuing to execute its IP-driven growth strategy.

    Highlights

    5

    • Net sales grew 4% as reported and 1% in constant currency to $862 million, ahead of expectations.

    • Gross billings grew 2% in constant currency, driven by Vehicles (up 13%) and Challenger categories (up 17%).

    • Acquired full ownership of Mattel163 Mobile Game Studio and repurchased $200 million of shares.

    • Hot Wheels, UNO, Monster High, Masters of the Universe, and Mattel Brick Shop showed double-digit growth.

    • Global POS was up mid-single digits, indicating positive consumer demand.

    Concerns

    4

    • Adjusted gross margin declined 450 basis points to 45.1%, primarily due to tariff costs (240 bps), unfavorable FX (140 bps), and inflation (90 bps).

    • Adjusted EPS declined $0.18 to a loss of $0.20.

    • Dolls declined 11% (due to Barbie) and Infant, Toddler, and Preschool declined 18% (primarily Fisher-Price).

    • Free cash flow on a TTM basis declined to $335 million from $582 million in the prior year.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 Net Sales Growth
    3% to 6%
    high materiality
    High
    Full-year 2026 FX Impact on Reported Net Sales
    1 to 2 percentage points tailwind
    medium materiality
    Medium
    Full-year 2026 Adjusted Gross Margin
    approximately 50%
    high materiality
    High
    Full-year 2026 Adjusted Operating Income
    $580 million to $630 million
    high materiality
    High
    Full-year 2026 Adjusted EPS
    $1.27 to $1.39
    high materiality
    High
    Full-year 2027 Revenue Growth
    mid- to high single-digit growth
    high materiality
    Medium
    Full-year 2027 Adjusted Operating Income Growth
    strong double-digit growth
    high materiality
    Medium
    Share Repurchase Authorization
    $1.5 billion
    high materiality
    High
    Optimizing for Profitable Growth Program Savings
    approximately $50 million
    medium materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Vehicles
    Continued momentum in the category, with key brands showing strong double-digit growth.
    Hot Wheels growth: double digitsDisney and Pixar Cars growth: double digits
    		—13%——
    Dolls
    Decline primarily due to Barbie, partially offset by growth in Monster High.
    Barbie performance: declinedMonster High growth: positiveAmerican Girl performance: comparable
    		—-11%——
    Infant, Toddler and Preschool (ITPS)
    Decline primarily due to Fisher-Price, though Little People showed strong growth driven by new partnerships.
    Fisher-Price performance: primary driver of declineLittle People growth: double digits
    		—-18%——
    Challenger Categories
    Strong collective growth, with UNO, Action Figures, and Mattel Brick Shop as key drivers.
    Games growth: positive (led by UNO, including Mattel163 contribution)Action Figures growth: positive (driven by owned and partner properties)Mattel Brick Shop performance: exceptionally well
    		—17%——
    International
    Growth across all sub-regions.
    EMEA growth: positiveLatin America growth: positiveAsia Pacific growth: positive
    		—8%——
    North America
    Decline includes the impact of a shift in U.S. retailer ordering patterns from direct import to domestic shipping. Ordering patterns are stabilizing, and growth is expected in Q2.
    		—-4%——

    Operational metrics

    14
    Adjusted Gross Margin
    45.1%down 450 bps YoY
    Q1 FY26
    Advertising Expenses
    $93 millionincreased $23 million YoY
    Q1 FY26

    Reflecting the timing of Easter this quarter and the inclusion of Mattel163 expenses.

    Adjusted SG&A Expenses
    $366 millionincreased $19 million YoY
    Q1 FY26

    Primarily due to strategic investments.

    Adjusted Operating Income
    ($70 million)loss widened from ($8 million) YoY
    Q1 FY26

    Primarily due to higher advertising expenses, lower adjusted gross profit, and higher adjusted SG&A.

    Adjusted EBITDA
    ($12 million)loss from $57 million gain YoY
    Q1 FY26

    Primarily due to the same factors that impacted adjusted operating income.

    Share Repurchases
    $200 millionpart of $1.4 billion since 2023
    Q1 FY26

    Part of the $1.5 billion share repurchase authorization expected to be completed by end of 2028.

    Cash and Equivalents
    $866 milliondown from $1.24 billion YoY
    Q1 FY26 end

    Decrease primarily due to $640 million of share repurchases over the last 12 months and $75 million for Mattel163 acquisition, net of cash acquired, partially offset by free cash flow generation.

    Owned Inventory
    $677 millionmodest increase YoY
    Q1 FY26 end

    Primarily reflecting tariff-related costs.

    Gross Leverage Ratio
    2.7x
    Q1 FY26 end
    Retailer Inventories
    low double digitsdeclined YoY
    Q1 FY26 end

    Believed to be well positioned overall for Q2.

    Optimizing for Profitable Growth Program Savings
    $16 million
    Q1 FY26

    Part of a program targeting $225 million between 2024 and 2026.

    Strategic Investments
    approximately $150 million
    FY26

    Designed to drive accelerated growth and profitability in areas like self-published mobile games, building sets, D2C, first-party data, and technology and infrastructure. Expected to have high ROI with net positive contribution to bottom line in 2027 and beyond.

    ITPS Headwind to Business
    2% to 3%
    FY26

    Expected headwind from the Infant, Toddler, and Preschool business for the full year.

    Capital Expenditure
    $65 millionhighest since 2017
    Q1 FY26

    For infrastructure upgrades, within the framework of 3% to 4% of net sales.

    Industry KPIs

    10
    MetricValueDetails
    EPS($0.20)USD
    Revenue$862 millionUSD
    Inventory$677 millionUSD
    Gross margin45.1%%
    Market share#1rank
    Adjusted EBITDA ebita($12 million)USD
    Operating income EBIT($70 million)USD
    Cash investments balance$866 millionUSD
    Tariff impact mitigation240 basis pointsbps
    Share buyback capital return$200 millionUSD

    Product announcements

    8
    ProductTypeDetails
    Masters of the Universe Mobile Gamelaunch
    Second Self-Published Mobile Gamelaunch
    UNO Digital Game Experienceslaunch
    Barbie Dreamhouse Tycoon Roblox Gamemilestone
    Masters of the Universe Movielaunch
    Matchbox Movieroadmap
    Hot Wheels, Polly Pocket, Barney, Rock 'Em Sock 'Em Robots Moviesroadmap
    Thomas & Friends Relaunchroadmap

    Deals & partnerships

    5
    Mattel163 Mobile Game StudioAcquired remaining 50% interest in the mobile game studio$75 million cash

    Acquired remaining 50% interest for $75 million cash, net of cash acquired. Integration is tracking according to plan.

    NetflixDigital game licensing for Pictionary

    Partnership for Pictionary branded digital game experience.

    ScopelyDigital game licensing for Scrabble

    Partnership for Scrabble branded digital game experience.

    NintendoPartnership for Little People brand

    New partnership for the Little People brand.

    DisneyPartnership for Little People brand (Toy Story, Mickey and Friends)

    New partnership for the Little People brand across Toy Story and Mickey and Friends.

    Risks & headwinds

    7
    Geopolitical events (Middle East conflict)ongoing

    minimal impact to date

    Mitigation: monitoring the situation, experienced team on the ground managing

    Rising commodity (resin) and freight costscurrent

    moved significantly higher

    Mitigation: guidance includes range of assumptions, not immune but too early to speculate on long-term impact

    Unfavorable foreign exchangeQ1 FY26

    140 basis points impact on gross margin

    Mitigation: FX expected to be a 1-2 percentage point tailwind on full year reported net sales

    InflationQ1 FY26

    90 basis points impact on gross margin

    Mitigation: gross margin guidance of ~50% for FY26 includes these puts and takes

    Decline in Dolls category (Barbie)Q1 FY26

    declined 11%

    Mitigation: partially offset by growth in Monster High

    Decline in Infant, Toddler and Preschool category (Fisher-Price)Q1 FY26

    declined 18%

    Mitigation: Little People grew double digits, relaunching Thomas in H2 FY26, assessing business for potential

    Shift in U.S. retailer ordering patternsQ1 FY26

    4% decline in North America gross billings

    Mitigation: ordering patterns stabilizing, North America expected to grow in Q2

    What to watch in Q2 FY26

    5

    North America Gross Billings Growth

    Q2 FY26
    Currentdeclined 4% in Q1 FY26
    Targetgrowth

    Why it matters

    Indicates stabilization of U.S. retailer ordering patterns, a significant headwind in prior quarters.

    Based on what we are seeing today, we believe U.S. retailer ordering patterns are stabilizing and expect our North America region to grow in Q2.

    Q&A highlights

    5

    How is Mattel exposed to rising resin and freight costs due to Middle East events, what are hedging strategies, and how is this factored into current guidance?

    Management stated minimal impact to date, reiterated guidance includes a range of assumptions, and it's too early to speculate on long-term effects. They have an experienced team managing the situation and are reiterating the ~50% full-year gross margin guidance.

    “We are not immune, but it's too early to speculate. And it depends, particularly on how long the disruption last and also how long the oil prices remain elevated.”

    asked by Megan Christine Alexander · answered by Paul Ruh

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Highlights

    Mattel reported a strong start to 2026, with net sales up 4% (1% constant currency) to $862 million, exceeding expectations. Gross billings increased 2% in constant currency, driven by Vehicles (up 13%) and Challenger categories (up 17%), while Dolls and Infant, Toddler, and Preschool declined. The company noted positive consumer demand and global POS up mid-single digits.

    02

    Strategic Investments & Digital Growth

    Mattel is making strategic investments totaling approximately $150 million in 2026 to accelerate growth and profitability, focusing on self-published mobile games, building sets, D2C, first-party data, and technology. The acquisition of Mattel163 Mobile Game Studio was completed, and the first self-published mobile game based on Masters of the Universe is in soft launch, with a second game targeted for later this year.

    03

    Brand Momentum & Theatrical Slate

    Several key brands, including Hot Wheels, UNO, Monster High, Masters of the Universe, and Mattel Brick Shop, achieved double-digit growth. The upcoming Masters of the Universe movie, set for wide global release, is expected to drive significant product sales and brand awareness, with a full cross-category product line already rolling out.

    04

    Gross Margin Headwinds

    Adjusted gross margin declined 450 basis points to 45.1%, primarily due to a 240 basis point impact from tariffs, 140 basis points from unfavorable foreign exchange, and 90 basis points from inflation. Management expects sequential improvement in gross margin throughout the year, reaching approximately 50% for the full year.

    05

    North America Ordering Patterns & Inventory

    North America gross billings declined 4% due to a shift in U.S. retailer ordering patterns from direct import to domestic shipping. However, management believes these patterns are stabilizing and expects the North America region to grow in Q2. Retailer inventories declined low double digits, positioning the company well for Q2.

    06

    Infant, Toddler, and Preschool (ITPS) Performance

    The ITPS segment declined 18%, primarily due to Fisher-Price, and is expected to be a 2-3% headwind for the full year. However, Little People within Fisher-Price grew double digits, driven by new partnerships. The company is assessing the business to maximize its potential.

    AI-generated summary of the company’s earnings call. Not investment advice.