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Mattel's Revenue Beats Estimates Despite Profit Squeeze
5 Aug
Summary
- Mattel's second-quarter revenue surpassed analyst expectations.
- Profitability declined due to tariff-related costs and higher expenses.
- The company maintained its full-year financial forecasts.
Mattel reported stronger-than-expected revenue for the second quarter, signaling progress in its strategy to expand its intellectual property-driven play and entertainment business. The company's net sales reached $1.12 billion, surpassing analyst estimates. This growth was supported by increased investments in brand promotion and digital gaming initiatives.
However, profitability was impacted by several factors. Adjusted gross margin decreased by 260 basis points to 48.6%, influenced by tariffs, inflation, higher royalty expenses, and unfavorable currency movements. Advertising and promotion expenses saw a significant jump of 57% year-over-year, contributing to a 60% decline in adjusted operating income.
Despite these margin pressures, Mattel reaffirmed its annual forecasts. The company expects full-year adjusted profit between $1.27 and $1.39 per share and net sales growth of 3% to 6%. Analysts noted that while the revenue outlook appears achievable, investor focus will be on Mattel's ability to convert sales growth into earnings amidst ongoing cost challenges.
