Mattel Q2 Earnings Miss Estimates on Costs, Revenues Beat on Vehicles

Net sales of $1.13 billion increased 10% year over year and surpassed the consensus mark of $1.08 billion by 4.2%. Growth was led by North America, Vehicles and the Action Figures, Building Sets, Games and Other category. Vehicles gross billings rose 11% in constant currency.

MAT’s Sales Rise on Broad Geographic Growth

North America net sales increased 12% year over year. International net sales advanced 9% as reported and 5% in constant currency, supporting broad-based top-line growth during the quarter.

Regional gross billings increased in North America, EMEA and Asia Pacific. North America gross billings rose 12% in constant currency to $613 million, while EMEA increased 7% to $363 million. Latin America was comparable at $165 million, and Asia Pacific advanced 4% to $126 million. Management believes U.S. retailer ordering patterns have now largely stabilized.

Mattel’s Vehicles and Games Drive Portfolio Gains

Worldwide Vehicles gross billings increased 14% as reported and 11% in constant currency to $463 million, primarily driven by Hot Wheels. The company expects Hot Wheels to achieve its ninth consecutive record year, supported by demand from children and adult collectors.

Action Figures, Building Sets, Games and Other gross billings surged 35% as reported and 33% in constant currency to $358 million. Growth was reflected in Games, including the contribution from Mattel's 163 digital titles, and Action Figures tied to theatrical releases. Mattel Brick Shop also performed well during the quarter.

MAT’s Dolls and Preschool Categories Remain Soft

Dolls gross billings declined 5% as reported and 7% in constant currency to $318 million, primarily due to lower Barbie sales. Weakness in Barbie and Polly Pocket was partly offset by growth in K-Pop Demon Hunters and Disney Princess and Frozen products. Management expects Barbie to return to growth in 2027.

Infant, Toddler and Preschool gross billings fell 11% as reported and 13% in constant currency to $128 million, mainly reflecting a decline in Fisher-Price. However, Little People delivered high-double-digit growth, aided by new partnerships.

Mattel’s Margins Contract as Spending Increases

Adjusted gross margin declined 260 basis points year over year to 48.6%. The contraction reflected the gross incremental cost of tariffs, inflation, higher royalties and unfavorable foreign exchange. Contributions from Mattel163, tariff-mitigation efforts and cost savings provided partial offsets.

Advertising expenses increased $45.2 million to $124.3 million, reflecting Mattel163, marketing and engagement activities and strategic investments. Adjusted selling and administrative expenses rose 11% to $383.6 million. Consequently, adjusted operating income declined 60% to $38.8 million, while adjusted EBITDA fell to $95.5 million from $170 million.

MAT’s Cash Position Falls as Buybacks Continue

For the first six months of 2026, cash flows used for operating activities were $202.1 million, compared with $275.3 million a year earlier. The improvement reflected more favorable working-capital usage, partly offset by lower net income excluding noncash items.

Mattel ended the quarter with $523.9 million in cash and equivalents, $829.8 million in inventories and $2.33 billion in long-term debt. The company repurchased $100 million of shares during the quarter, bringing the year-to-date total to $300 million.

Mattel Reaffirms 2026 Earnings & Sales Outlook

Management reaffirmed its 2026 outlook, projecting constant-currency net sales growth of 3% to 6%. Adjusted gross margin is expected to be approximately 50%, while adjusted operating income is forecast between $580 million and $630 million.

Mattel continues to expect adjusted earnings of $1.27-$1.39 per share and an adjusted tax rate of approximately 24%. The company also reaffirmed its $400 million share-repurchase target for the year.

MAT’s Zacks Rank & Key Picks

MAT currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Consumer-Discretionary sector are Life Time Group Holdings, Inc. LTH, The Marcus Corporation MCS and AMC Entertainment Holdings, Inc. AMC.

Life Time Group presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Life Time Group delivered a trailing four-quarter earnings surprise of 9.5%, on average. The stock has surged 66.6% in the year-to-date period. The Zacks Consensus Estimate for LTH’s 2026 sales and EPS implies growth of 11.5% and 19.4%, respectively, from the year-ago levels.

Marcus currently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings miss of 34.2%, on average. The stock has jumped 100.9% in the year-to-date period.

The Zacks Consensus Estimate for Marcus’ 2026 sales and EPS indicates growth of 8.3% and 605.9%, respectively, from the year-ago period’s levels.

AMC Entertainment presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 321.7%, on average. The stock has rallied 75.7% in the year-to-date period.

The Zacks Consensus Estimate for AMC Entertainment’s 2026 sales and EPS indicates an increase of 13.3% and 77.1%, respectively, from the year-ago levels.

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