Brand Investments and Cost Efforts to Stoke Profit Margin Expansion at Mattel in 2027 and Beyond

Mattel harvested gains from its turnaround, delivering above breakeven operating margins starting in 2019 and reaching 11.6% in 2025. However, the firm has a soft 2026 outlook, which includes 3%-6% constant-currency sales growth, and an operating margin around 10.5%-11.4%, marking a second year of margin contraction, even with a $225 million cost-saving program (2024-26) underway. Thankfully, the firm's capital-light strategy has helped control capital expenditures, supporting a double-digit operating margin while allowing for product innovation investments. Beyond 2026, we model a 12% average adjusted operating margin, as we believe full profit potential will be tempered by tactical investments to elevate brand relevance.