Mattel Demand Holding Firm, While Tariff Mitigation Is Already Underway, Protecting Profits

Mattel has harvested gains from its turnaround, delivering above breakeven operating margins starting in 2019 and reaching 13.7% in 2024. While Mattel pulled its 2025 outlook as a result of tariff and demand uncertainty, we still think it can deliver modestly positive sales growth, and we expect only minor pressure to the operating margin this year, aided by its $200 million cost-saving program (2024-26). Additionally, the firm's capital-light strategy has led to lower expenditures than in the past, supporting profitability while allowing for investment in product innovation. Beyond 2025, profits could be held back by tactical investments as well as input cost inflation.