Mattel Inc MAT

Mattel's Investments for Longer-Term Growth Alongside Rising Costs Hinder 2026 Profit Potential

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%-11.5%, 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.