Mattel (MAT) Q3 2026 earnings review
Tariff refund lifts Mattel's profit, but Mattel cuts its outlook
Mattel's profit rose only because of a tariff refund, and its new chief executive cut the plan he inherited. Sales grew 4% on Hot Wheels and licensed dolls, while Barbie and Fisher-Price kept shrinking. Chief executive Roger Lynch said "Barbie is a priority, but the current performance is not where it needs to be"; its billings fell 9%. By our math the plan has fourth-quarter sales falling about 1%.
| Sales | $1,807M +4% from a year ago; +3% before currency |
|---|---|
| Operating profit, excluding one-offs | $502M $88M of it is a tariff refund |
| Full-year operating profit outlook | Cut $70M middle of the range: $535M, before any refunds |
| Hot Wheels billings | +7% +14% last quarter |
⚖️ Verdict: 🔴 Bearish
The story got worse because the year's plan came down. The outlook excludes the refund already received, so by our math fourth-quarter operating profit lands 9% below last year. The good news: Hot Wheels heads for a ninth record year, and the cost programme hit its target early.
The question now is whether the slowdown is the toy market's or Mattel's. Either shoppers bought less everywhere, as finance chief Peter Griffith described, or Mattel's brands lost ground; he declined to say which. February's holiday numbers and 2027 plan will tell.
🐂 Bull Case
Hot Wheels Heads for a Ninth Record Year
Hot Wheels is Mattel's largest brand, a line of die-cast cars. It is "on track for its ninth consecutive record year", chief executive Roger Lynch said on his first call. He added that the brand is "approaching $2 billion in gross billings" and will make about 1 billion cars this year.
Billings rose 7% in the quarter, and every vehicle brand grew, outgoing finance chief Paul Ruh said. The pace has slowed, though, from 17% in the first quarter, so the brand no longer covers the shrinking ones alone.
What to watch: Hot Wheels billings in the fourth quarter against the company total, which the new outlook has falling by our math. Growth there while the rest declines would place the problem in Barbie and Fisher-Price, not toy demand.
Licensed Dolls Return the Category to Growth
Dolls are Mattel's biggest category, and they grew for the first time since the holiday quarter because of brands Mattel licenses rather than owns. Billings rose 4%, and partner brands, led by KPop Demon Hunters dolls from the Netflix film, added 13 points, the filing said.
Lynch said Mattel moved "quickly behind a rapidly evolving cultural phenomenon" and treats partner brands "as if they were our own". Licensed toys cost more to sell, though, because the licensor takes a share. Royalty payments rose 17%, or 0.6 points more of sales than a year ago.
What to watch: the Dolls growth rate in the fourth quarter, the film's first holiday season. A second quarter of growth would show the licence adds sales rather than just covering Barbie.
Positives this quarter didn't test
Three parts of the growth story that Mattel's previous management built got no numbers this quarter. Lynch set priorities that start with toys, and said of them that "it's not a strategy change. It is a focus change".
- Digital games: Mattel163 no longer reports its own results, and the second self-published game, UNO Wild, got no update. Its sales would show whether the studio earns its price.
- Films and content: the Matchbox film due on Apple TV in October and the Thomas & Friends relaunch went unmentioned. Fourth-quarter billings would show whether content sells toys.
- Building sets: Lynch called Mattel Brick Shop "a great success" and is "evaluating capacity around the world". Yet Building Sets took 3 points off its category's growth; a return to growth would support his plan.
🐻 Bear Case
Mattel Cuts Its Outlook as Store Sales Slow
Mattel kept its full-year plan in July. Finance chief Peter Griffith has now lowered every line. He cited "a deceleration in trends during the latter part of the third quarter" and "similar trends across our major markets" into the fourth.
The cut is larger than it looks, because the plan leaves out the $88 million refund already booked. By our math, the fourth quarter gets about $153 million of operating profit, 9% below last year. Sales would fall about 1%.
- Buybacks: about $8 million, after $100 million in the second quarter, by our math
- Debt to cash profit, excluding one-offs: 2.7 times, from 2.5 a year ago
- Cash: $541 million, down from $692 million
"The company's earlier commentary reflected the information available at that time," Griffith said. Yet the quarter landed inside the range the July plan implied, so the shortfall sits entirely in the fourth quarter. Thinner cash profit matters too: $600 million of notes fall due in December 2027.
What to watch: fourth-quarter sales against the roughly $1.7 billion the plan implies, by our math. A result near the bottom would mean the slowdown deepened over the holidays.
The Profit Increase Is a Tariff Refund
Mattel reported operating profit excluding one-offs of $502 million, up $106 million. The release credits a gross margin "primarily driven by $88 million of tariff refunds received". The Supreme Court ruled those duties unlawful in February.
Without the refund, gross margin excluding one-offs was 50.1% by our math, against 50.2% a year ago. Inflation and higher royalties ate what the games studio, currency and savings added.
- Cost of goods: refund worth 4.9 points of sales; inflation 2.0 points against; royalties 0.8 points against
- Advertising: up 1.1 points of sales
- Overheads excluding one-offs: down 1.3 points of sales, almost all from reversing the departed chief executive's stock awards
Without the refund and that reversal, operating profit was about $390 million by our math, under last year's $395 million. So the quarter hid the pressure from inflation and royalties rather than easing it. Customs opened a third refund phase in October, but July class actions seek to hand refunds to consumers.
What to watch: fourth-quarter gross margin excluding one-offs and refunds, near 47% in the plan by our math. A lower figure would mean inflation and royalties still beat the cost programme.
Barbie and Fisher-Price Keep Shrinking
Barbie, Mattel's flagship doll, and Fisher-Price, its infant and preschool brand, keep falling. Lynch said "the trends on Barbie have maybe improved slightly, as you saw in Q3, but still down year-over-year".
- Barbie: down 9%, after 16% declines in the two previous quarters
- Fisher-Price: down 14%; its category down 16%, the steepest fall in the portfolio
Previous management expected Barbie to grow again in 2027 and promised double-digit profit growth that year. Griffith declined to repeat either and deferred 2027 to February. The year-old infant and preschool review went unmentioned. That matters because the 2027 recovery justified this year's spending.
What to watch: Barbie's fourth-quarter billings and whether the February plan keeps the 2027 return to growth. Another decline would make dropping that promise the easy choice.
New Categories Grew Only With the Acquired Studio
Mattel's fastest category holds action figures, building sets and games, including Mattel163, the mobile games studio bought outright in March. Billings rose 12%, and the category was the main growth story of the first half.
Ruh said that "Excluding the contribution of Mattel163, gross billings for the challenger categories declined". He blamed the loss of the Pokémon licence last year and retailers moving orders into the fourth quarter.
- Games, including Mattel163: 9 points of the growth
- Action Figures: 5 points
- Building Sets: minus 3 points
This matters because the studio's sales were not in last year's numbers, so Mattel bought that growth. It stopped publishing the studio's results after one quarter, so readers cannot separate the two. If the studio added the same $49 million as in spring, sales from businesses Mattel owned a year ago grew about 1%, by our math.
What to watch: the category's growth rate in the first quarter of 2027, when the studio enters the comparison. A rate near zero then would confirm that this year's growth in new categories was the acquisition.
👓 Other Themes
A New Chief Executive, Finance Chief and President
Roger Lynch became chief executive in October after Ynon Kreiz left; Peter Griffith joined as finance chief and Steve Totzke became president and operating chief. Lynch's priorities: "strengthen our brands and win in toys, drive innovation and creativity, and invest with discipline to drive profitable growth". He noted "considerable external commentary about the company recently", said the board will "explore any actionable opportunities", and gave shareholder EdgePoint a board seat.
Cost Programme Reaches Its Target Early
Optimizing for Profitable Growth is the three-year programme to cut factory and overhead costs. It reached its full $225 million of annual savings by the end of September, a quarter before its end-2026 deadline, the filing said. Savings are "now expected at or above the $225 million target". Mattel announced no successor programme, though Lynch said he will look at "global cost structures" and use AI to raise productivity.
💲 Other KPIs
Up 49% from a year ago, and now 4.4% of sales over twelve months. A year earlier it was 3.3%. Free cash flow over twelve months fell 10% to $440 million as a result, even though operating cash flow rose. Lynch said Mattel is evaluating factory capacity for Brick Shop, so the spending may stay high.
Flat against a year ago while sales grew 4%. Receivables were flat too, at $1.4 billion, and customers paid two days faster. Griffith said retailer inventories are below last year, so Mattel's own stock is not the risk going into the holidays; the question is how fast retailers reorder.
Down 9.8% from a year ago after $496 million of buybacks over twelve months. That gap between the share count and profit is why earnings per share grew faster than operating profit. The quarter itself added almost no buybacks, so the decline will slow from here.
Unchanged from a year ago while international sales rose 5%, because advertising and overheads in the segment rose faster than sales. The segment's profit margin slipped to 26.3% from 27.5%. North America, which received the whole tariff refund, grew its profit 22%.
🔮 Guidance
Cut. The plan now has sales growing about 2.5% at the middle of the range before currency. Currency adds about 1 point on top. By our math that leaves fourth-quarter sales of roughly $1.7 billion at the middle of the range. That is about 1% below last year, after 4% growth this quarter. Griffith blamed slower sales at the tills late in the quarter across major markets.
Cut, and the new figure excludes tariff refunds, which the old one never counted either. By our math, the plan implies about 47% in the fourth quarter, against 46% a year ago when heavy promotions hit. The quarter just reported came in near 50% without the refund, so the fourth quarter stays the weakest of the year.
Cut. The middle of the range fell $70 million to $535 million. It excludes the $88 million refund already received. By our math the fourth quarter gets $118–188 million. A year ago it earned $169 million on the same basis. The record runs one way: Mattel reiterated last year's plan in the third quarter and then missed it; it held this year's in July and cut it now.
Cut. The middle of the range fell to $1.13 from $1.33. That is a quarter below last year's $1.49, and it excludes refunds. The share count is about 10% lower than a year ago. So the cut in profit per share is smaller than the cut in operating profit alone would produce.
Lowered by a point, which adds a little to profit per share. The rate was 22% this quarter, and the refund carried its own tax charge of $9.9 million, which the filing lists as a one-off item.
Unchanged. Currency adds about a point to reported sales for the year at current rates. In reported terms the plan therefore runs about a point above the 1% to 4% constant-currency range.
❓ Key Questions
How much of this year's growth came from Mattel163?
Ruh said the new categories declined without the studio, and Mattel no longer reports its results. Readers cannot tell growth from businesses Mattel owned a year ago from the acquisition until it enters the comparison in March.
Is the $400 million 2026 buyback target still in place?
Mattel bought about $8 million of shares in the quarter after $300 million in the first half, by our math. Neither the release nor the call repeated the target set in July.
Does the 2027 plan keep Barbie's return to growth?
The previous management expected Barbie to grow in 2027 and profit to rise double digits. Griffith deferred everything to February, so the targets that justified this year's spending are open.
What is the outcome of the Fisher-Price review?
The strategic assessment of the infant and preschool business is a year old. The category fell 16% again, and the new management did not mention it.
How much more tariff refund can Mattel keep?
Customs opened a third refund phase in October and Mattel has booked no receivable. Class actions seek to return refunds to consumers, and the new outlook excludes any further refunds.