Barbie Toymaker Mattel Warns Tariffs May Force It To Raise Some Prices

The uncertainty about tariffs and how they will impact toy prices and consumer demand caused toymaker Mattel to withdraw its financial forecast for the year and warn that it may have to raise prices on toys sold in the United States.

Mattel, in its first quarter earnings call, held today after the market closed, emphasized that while it joins the rest of the toy industry in lobbying for zero tariffs on toys, it is preparing for what is likely to be a long period of high tariffs on goods made in China and other countries.

Mattel executives said they are speeding up the diversification of their sourcing and making sure that 40-50% of their product mix will be toys that will still be priced at $20 or less, even with the tariff impact.

Toy Industry Worried About Trade War

Mattel’s comments come as the toy industry as a whole is becoming increasingly concerned about the impact of the tariffs on China, with a number of toy executives warning they will put many smaller companies out of business.

Wall Street initially reacted negatively to Mattel’s first-quarter results, sending the toy company’s stock down more than 2% immediately after the numbers were released, despite better than expected results. Mattel beat expectations for net sales, at $827 million, up 2%, and a lower-than-expected adjusted loss per share of 3 cents.

After Mattel’s earnings conference call with investors the stock rebounded a bit and was down 1,2% an hour after the call ended. Prior to the earnings release the stock closed for the day at $16.20.

“The volatile macro-economic environment and evolving U.S. tariff landscape” makes it “difficult to predict consumer spending and Mattel’s U.S. sales in the remainder of the year and holiday season,” Mattel Chairman and CEO Ynon Kreiz said in the call. As a result, Mattel is pausing 2025 guidance forecasts until there is more “visibility” and what it can expect, Kreiz said.

However, Kreiz said, the company is confident it will be able to comfortably navigate the current uncertainty and potential price increases, and may also be well-positioned to benefit from the current uncertainty. Retailers could end up ordering more Mattel products if other toymakers are unable to fill their shelves.

“At Mattel, we are very good at navigating complexity, volatility and dynamic situations. We are adapting with speed, agility and discipline and are ready for the challenge,” Kreiz said.

A Seven-Year Shift Away From China

Mattel has been working for a long time to reduce its dependence on Chinese manufacturing and to have multiple manufacturing locations around the world for its top products, Kreiz said.

“We have been on this journey for seven years. This is not happening overnight.” he said.

While price increases may be necessary for some toys, those decisions will be “in close collaboration with our retail partners, while always keeping the consumer in mind,” Kreiz said.

Mattel currently manufactures about 40% of its worldwide toy sales in China, but only 20% of the toys it sells in the United States are made there. The company’s goal is to reduce the percentage of U.S.-bound toys that are made in China to less than 15% by 2026, and less than 10% by 2027.

The majority of the toys in two of its top selling brand, Barbie and Hot Wheels, are manufactured outside of China, Mattel Chief Financial Officer Anthony DiSilvestro said on the call.

China, however, remains the manufacturer of a good portion of Mattel’s dolls and playset, which means Mattel “while have to watch its pricing very closely, especially heading into the holiday season,” James Zahn, Editor-In-Chief of the Toy Book said in comments after the earnings call.

Holiday Toy Shortages Possible

The trade war with China, and resulting uncertainty is causing real pain in the toy industry, Zahn said.

“Many toy and game manufacturers have shut down production lines and paused shipments,” he said. “If they don’t resume within the next week or two, this holiday season could see product outages on a level that we’ve never experienced before.”

Recent comments from the White House dismissing the impact on the industry have drawn angry reactions from many in the industry. “It’s hard not to take it personally when you’re one of the more than 600,000 individuals whose livelihoods are at stake, Zahn said.

“The misguided attempt to lure toy manufacturing to the U.S. is putting good-paying American jobs at risk,” Zahn said. “The U.S. is not a manufacturing powerhouse – it is a creative powerhouse.”

One strategy Mattel executives outlined on the call for navigating the current trade war is using Chinese factories to make products to be sold outside of the United States, and shifting goods intended for U.S. stores to factories in countries not facing the high tariffs that have been imposed on China.

“We are shifting sourcing flows across our portfolio between countries where we make product and countries where we sell product,” Kreiz said. “In some cases where a product is in high demand we will dual source from two or more countries and can use this to our advantage,” he said.

“For example, [Mattel card game] UNO, which is produced in both China and India, is increasing flow from China toward international customers, and we are significantly ramping up volume in India to serve the U.S. market,” Kreiz said.