Mattel (MAT) shares are rising more than 12% in premarket trading Wednesday, after the maker of Barbie dolls and Hot Wheels announced plans to mitigate the threat of tariffs by relying on its supply chain and price rises. It also forecast a surprising growth in 2025 sales.
The toymaker said Tuesday that it expects 2025 net sales to grow 2% to 3%, versus 2024 sales, which fell 1.1% year-over-year. It also guided for adjusted earnings per share (EPS) of between $1.66 and $1.72.
“Guidance includes the anticipated impact of new U.S. tariffs on China, Mexico and Canada imports announced on February 1st, and mitigating actions we plan to take, including leveraging the strength of our supply chain, and potential pricing,” Mattel said.
UBS analysts said Wednesday that "the biggest surprise from Mattel was guidance to EPS growth despite U.S. tariffs on China, Canada and Mexico. "
“It sounds as if Mattel's mitigating efforts could include a combination of shifting production out of China, pricing and supply chain optimization," they wrote, as they raised their price target on the stock to $29 each from $26.
Mattel sources its toys from seven countries, with China expected to make up less than 40% this year, according to a transcript of its earnings call provided by AlphaSense, citing Chief Financial Officer Anthony P. DiSilvestro. Mexico makes up less than 10%, he added, saying that by 2027, "no single country is expected to represent more than about 25% of total global production."
The toymaker on Tuesday posted a 2% year-over-year rise in fourth-quarter net sales of $1.65 billion, and adjusted earnings per share of 35 cents. That beat consensus estimates compiled by Visible Alpha of revenue of $1.63 billion and adjusted EPS of 19 cents per share.
U.S. President Donald Trump implemented a 10% tariff on Chinese imports early Tuesday morning, and hours later, China announced its own tariffs against U.S. imports. Tariffs of 25% on imports from Mexico and Canada has been delayed for one month but still looms.
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