Tariff Uncertainty Hurt Toy Sales In Q2, Hasbro And Mattel Report

Sales of traditional toys by the country’s two largest toy manufacturers, Hasbro and Mattel, fell during the second quarter, due to delayed ordering by retailers worried about possible price increases, the companies said in releasing their earnings reports Wednesday.

Both companies said they believe they are well positioned to weather any potential tariff impact in the second half of the year. But they acknowledged they can’t really predict how much consumers will be willing to spend on toys if other household expenses increase due to tariffs.

Hasbro CEO Chris Cocks also warned toy companies might have trouble restocking sold-out holiday toys due to delayed ordering during the first part of the year.

Hasbro and Mattel both delivered upside surprises with their earnings. Hasbro beat expectations for earnings and revenue. and Mattel beat expectations for earnings.

The ongoing tariffs concerns were reflected in Wall Street’s reaction to the second quarter results, however.

Hasbro, which reported its results before the market opened Wednesday, ended the day down 0.9%, at $76.84. Mattel, which reported after the market closed, was down 4.9%.

Hasbro’s net sales were down 1%, less than analysts expected, while Mattel suffered a greater than expected revenue drop of 6%.

Diversifying Away From Traditional Toys

Both companies have been shifting away from traditional toys as their dominant revenue producer for years before the current tariff uncertainty.

Hasbro’s second quarter earnings report again underscored the wisdom of its 1999 purchase of gaming publisher Wizards of the Coast.

The Wizards of the Coast and digital gaming business had revenue growth of 16% during the quarter, while the consumer products segment, which includes traditional toys, decreased by 16%.

Magic: The Gathering, a collectible card game Hasbro acquired when it bought Wizards of the Coast, has seen particularly explosive growth in recent years, with revenue up 23% during the second quarter.

Final Fantasy Magic Release Sets Record For Sales

The most recent Magic: The Gathering release, based on the Final Fantasy Japanese science fantasy video games, is the highest grossing release to date, achieving $200 million in revenue in one day, Cocks said in the earnings conference call.

The Magic brand also is helping Hasbro lean into the trend toward in-person play experiences for adults.

“Organized play is on fire,” Cocks said during the call. “We saw a nearly 40% year-over-year increase in unique players during the first half of 2025.”

Hit Toys Could Be Hard To Find

Cocks cautioned that because initial tariffs fears caused retailers to delay orders, some popular toys might not be able to be restocked if they sell out before Christmas. He cited Play-Doh Barbie, the collaboration that combines Hasbro’s Play-Doh brand with Mattel’s Barbie; the new Nano-Mals toy line, and toys featuring Evie, Peppa Pig’s new baby sister, as items that could be hard to find if parents wait to buy them.

Hasbro is well-positioned for the holiday season, with a strong lineup of new products, James Zahn, Editor-in-Chief of trade publication The Toy Book, said.

“Magic: The Gathering is a sales behemoth, and licensed collaborations, like Final Fantasy, continue bringing freshness into the game. With three more tentpole releases left this year, Magic is on a roll,” Zahn said.

Hasbro also has a host of new product reveals and activations planned at Comic-Con International San Diego this weekend, Zahn said, for brands including G.I. Joe, BeyBlades, Marvel, Star Wars, and Dungeons and Dragons.

Mattel Betting On Entertainment Division

Mattel is looking for sources of growth beyond traditional toys by leaning into its entertainment division. It recently announced the formation of Mattel Studios, combining its film and television units, and hopes to release one to two films per year, starting in 2026 with Masters of the Universe and Matchbox.

It also has a Barbie animated film in the works with the company that created Minions, Despicable Me 3 and the Super Mario Bros. movie.

“Barbie is more than a doll. She is a pop culture icon that transcends generations,” Mattel CEO Ynon Kreiz said in the Mattel earnings call. “We look forward to creating animated film history together and further strengthening Barbie’s standing at the forefront of current culture.”

Mattel recently announced that it has partnered with OpenAI to use artificial intelligence tools to create new ways to interact with Mattel toy characters.

AI-Enhanced Barbie Could Be In Mattel’s Future

AI has the power has the power to “broaden the reach of our brands in new and exciting ways,” Kreiz said on the call. “Mattel’s work with OpenAI will enable us to leverage new technologies to solidify our leadership and innovation and reimagine new forms of play. We plan to share more later this year,” he said.

While Mattel’s sales decline was slightly larger than expected by analysts, “given this year’s challenges,” the toymaker still had “some wins to celebrate” in the second quarter, Zahn said.

It reported growth in its American Girl brand and “the big year at the box office bodes well for Mattel as Jurassic World Rebirth and A Minecraft Movie have driven big business,” Zahn said.

For the holidays, Hot Wheels, new dolls inspired by the Wicked for Good movie, updates to the Monster High brand, and other product lines, are expected to boost sales, Zahn said.

In terms of tariff impact, large companies like Mattel and Hasbro have advantages that help them mitigate the impact, Zahn said. They “have deep enough pockets to pull certain levers that smaller companies just can’t manage, and that could help both Mattel and Hasbro gain market share toward the end of the year if they can deliver products where others cannot,” he said,