synopsis

The company is also reorganizing its supply chain to reduce toy shipments from China.

Mattel (MAT) on Monday withdrew its annual forecast after reporting an upbeat quarter and said that U.S. trade tariffs would bump costs by hundreds of millions of dollars this year.

The toy maker, known for Barbie dolls and Hot Wheels cars, is the latest casualty of the U.S. trade policy, which includes particularly high tariffs on key manufacturing partner China.

Although President Donald Trump has paused some tariffs and announced exemptions on some items like gadgets and semiconductors, the toy industry has not been lucky.

"Given the volatile macroeconomic environment and evolving U.S. tariff landscape, it is difficult to predict consumer spending and Mattel's U.S. sales in the remainder of the year and holiday season," Mattel said.

The company added that it saw $270 million in incremental costs from tariffs this year. Earlier, Mattel had guided for an up to 3% rise in sales in 2025, but it has now pulled back that target.

Mattel manufactures less than 40% of its products in China, according to Bloomberg News.

The company is now making an effort to diversify its supply chain. CEO Ynon Kreiz said on the analyst call that Mattel expected to buy less than 15% of its toys sold in the U.S. from China by 2026, and less than 10% by 2027.

The company announced plans to scale back promotions to reduce expenses and raised its annual cost-savings goal from $60 million to $80 million.

The dire outlook took some sheen off a strong quarterly report. First-quarter sales rose to $827 million, beating analysts' estimate of $786 million from LSEG/Reuters.

It posted a smaller-than-estimated adjusted loss of $0.03 per share.

On Stocktwits, the retail sentiment rose to 'extremely bullish' from 'bullish', and message volume rose to 'extremely high'.

A bearish user said, "no guidance so the bad news comes out in drips rather than all at once."

Mattel shares are down 8.6% year to date.

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