Mattel Set for Another Year of Flat Sales as the Toy Industry Struggles to Grow

Mattel continues to harvest gains from its turnaround, delivering above break-even operating margins starting in 2019 and reaching around 12% in 2023. Despite the expectation of little sales growth, we expect Mattel to produce operating margin expansion in 2024, thanks to its newly launched $200 million cost-saving program. Additionally, the firm's shift to a capital-light strategy has provided 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 as well as logistics and input cost inflation.