Key Brands Drive Demand at Mattel, but Consumer Sentiment Dictates Success of Holiday Season

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 only modest operating margin declines in 2023 given the recent shift in consumer sentiment before capturing further expansion ahead, helped by its $300 million cost-saving program. The shift 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), but profits could be hurt by tactical investments in dolls and vehicles capacity as well as logistics and input cost inflation.