Tough Holiday Season Weighs on Mattel's Start to 2023, but Long-Term Brand Potential Intact

Mattel continues to harvest gains from its turnaround, delivering above break-even operating margins starting in 2019 and reaching around 13% in 2022. We expect Mattel to produce further adjusted operating margin expansion ahead, helped by the execution of its $300 million cost-saving program. While movement to a capital-light strategy offers lower capital and operating expenditures than in the past (supporting profit growth while allowing for investment in product innovation), profits could be hurt by tactical investments in dolls and vehicles capacity as well as logistics and input cost inflation.