Mattel Cuts 2026 Earnings Forecast to $1.05–$1.20 a Share as Sales Weaken

Key Facts

Mattel cut its forecast for fiscal 2026, saying it now expects sales growth of 1% to 4%, compared with its previous range of 3% to 6%. The company also lowered its adjusted earnings estimate to $1.05 to $1.20 a share, from $1.27 to $1.39. The announcement came on November 5, alongside results showing net sales of $1.807 billion in the third quarter. Although sales rose 4% on a reported basis and 3% in constant currency, they fell short of analysts’ $1.84 billion estimate, according to Reuters. The company’s shares fell about 6% in extended trading after the results, Reuters reported.

Adjusted earnings were $1.30 a share in the third quarter, compared with $0.91 in the same period a year earlier, according to Mattel investor relations data. Adjusted operating income rose to $502 million, up $106 million from a year earlier. Adjusted gross margin widened to 55.0%, from 50.2% a year earlier. Reuters attributed part of the margin improvement to $88 million in tariff refunds. But the stronger quarterly profitability did not prevent the company from cutting its annual estimates, while sales growth remained below analysts’ expectations.

Mattel said sales weakened toward the end of the third quarter and that the weakness continued into the fourth quarter. This comes as toy companies prepare for the holiday season amid expectations of weak demand, according to Reuters. The agency added that U.S. consumers are cutting discretionary spending as energy costs and inflation rise. In August, the company had reaffirmed its forecast for sales growth of 3% to 6% and adjusted earnings of $1.27 to $1.39 a share. The new ranges represent cuts to both estimates compared with that previous guidance.

Performance varied by geography: sales in North America rose 4% on a reported basis and 4% in constant currency, while international sales increased 5% on a reported basis and 3% in constant currency. By category, gross billings for vehicles rose 9% on a reported basis and 7% in constant currency, to $680 million. By contrast, gross billings for the infant, toddler and preschool category fell 16% on a reported basis and 17% in constant currency, to $221 million. The company said weakness at Fisher-Price was the main reason for the category’s decline. Gross billings for dolls rose 4% to $703 million, driven by partner brands, including the addition of “K-Pop Demon Hunters,” while a decline in Barbie offset most of that growth.

Chief Executive Roger Lynch said his first weeks leading Mattel had strengthened his belief in the company’s potential, adding: “I also see clearly the areas where we need to improve.” On the earnings call, he said the company had “strong brands, talented employees and a significant long-term opportunity.” His comments come at the start of his tenure, after he was appointed the company’s new chief executive. Mattel also named Steve Totzke president and chief operating officer, with his appointment to begin on November 11, 2026. The company is making these leadership changes as it contends with weaker sales and cuts to its annual estimates.

Mattel said its adjusted earnings estimate for the year excludes benefits from tariff refunds recognized to date, as well as any additional refunds that may be recorded during the rest of 2026. This means the new earnings range excludes those benefits, even though $88 million in refunds helped widen third-quarter margin. In the first nine months of 2026, the company repurchased $308 million of shares. As of September 30, 2026, about $1.2 billion remained available under a total $1.5 billion buyback authorization. MAT shares closed at $14.97 on November 5, according to EL7 data.

Second-quarter results showed a different backdrop for sales and margins ahead of the third-quarter figures. Net sales then rose 10% on a reported basis and 9% in constant currency compared with the second quarter of 2025. But adjusted gross margin fell 260 basis points to 48.6% in the second quarter. In August, Mattel kept its annual forecast range at sales growth of 3% to 6% and adjusted earnings of $1.27 to $1.39 a share. It then cut those ranges in November, saying sales weakness that began toward the end of the third quarter continued into the fourth quarter.