MW Mattel stock rallies, as outlook for profits - and Barbie - outweigh potential tariff impact

By Bill Peters

Toy maker plans to buy back $600 million in stock this year

Shares of Mattel Inc. jumped after hours on Tuesday after the toy maker forecast an adjusted per-share profit for this year that came in above analysts' expectations, saying it had plans in place, including potential price increases, to offset a fresh round of tariffs from President Donald Trump.

Moreover, the toy maker - which oversees Barbie, Hot Wheels and Fisher-Price toys among others - said it plans to buy back $600 million worth of its stock this year. And it said it expects 2025 to be a better year for Barbie, after 2024 faced a higher bar to clear due to the boost it got in 2023 by the blockbuster film based on the iconic doll.

And as it tries to turn more of its classic toys into films, shows, games and other content, management said it expects Mattel $(MAT)$ to become a bigger entertainment company.

"We believe Mattel is well-positioned to increase market share in our entertainment business in 2025," Chief Executive Ynon Kreiz said on Mattel's earnings call.

"We expect progress to continue on our two films in production and 14 announced films in development," he continued. "More shows to launch on Netflix, including 'Hot Wheels Let's Race' Season 3, Barbie's next animated special, and new seasons of 'Thomas & Friends' and 'Polly Pocket.'"

Shares were up 9.3% after hours.

The company said it expects adjusted earnings per share of $1.66 to $1.72 for 2025. That forecast was above FactSet estimates for $1.57.

The outlook, Mattel said, factored in "the anticipated impact of new U.S. tariffs on China, Mexico and Canada imports announced on February 1st," as well as actions the company planned to take to address the new duties, some of which have been put on hold for at least 30 days.

Those actions, Mattel said, included "leveraging the strength of our supply chain." But the company said its response could include actions related to "potential pricing."

Trump over the weekend said the U.S. would put 25% tariffs on imports from Mexico and Canada, with a 10% additional tariff on imports from China. Energy from Canada would be taxed at 10%. Mexico and Canada on Monday worked out deals to keep those tariffs from taking hold for roughly another month.

Economists have said that Trump's tariffs - intended to extract concessions on trade and other issues from other nations - will likely prompt businesses to raise prices to some degree, as they pass on the extra costs of those import taxes on to shoppers. Those shoppers have already been dealing with three years of higher costs of living, which has weighed on demand for items like toys.

UBS analysts have said that Mattel and its rival Hasbro Inc. $(HAS)$ weren't as vulnerable to tariffs as some of their rivals, as they had less exposure to China. UBS analyst Arpine Kocharyan said in October that the toy industry overall had "80% exposure to?China." Around 50% of Mattel's products are made in China, she said.

For the fourth quarter, Mattel reported $1.65 billion in sales, up 2%. Adjusted earnings per share were 35 cents. Both were above FactSet forecasts.

Overall, Mattel saw an increase in gross billings, a gauge of what retail stores buy from the company, in North America and internationally. But for dolls, mainly Barbie dolls, they fell.

Ahead of Tuesday's results, Kocharyan said that despite a possible slowdown from the shorter traditional holiday shopping season - from Thanksgiving through Christmas - there was room for optimism for the period. She said the weaker showing from Barbie had already been appropriately telegraphed by the company and understood by Wall Street.

"Barbie declines are expected and in guidance," she said in a note on Monday. "Overall, Mattel saw strength in Hot Wheels and in dolls driven by 'Moana' theatrical release in Q4."

-Bill Peters

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 04, 2025 19:48 ET (00:48 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.