Material Profit Improvement Could Take Time as Mattel's New Management Develops Investment Plan

Mattel harvested gains from its past 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 1%-4% constant-currency sales growth, and an operating margin around 9.0%-10.5% (excluding tariffs), marking a second year of margin contraction, even with a $225 million cost-saving program (2024-26) underway. Historically, the firm's capital-light strategy has helped control capital expenditures, supporting a double-digit operating margin while allowing for product innovation investments. We expect the firm to return to these levels beyond 2026, where we model a 12.3% average adjusted operating margin over our forecast.