Mattel 2025 Q2 Earnings Revenue Declines 5.7%

Mattel (MAT) reported its fiscal 2025 Q2 earnings on Jul 29th, 2025. The company posted a revenue decline of 5.7% year-over-year, underperforming expectations. Mattel's adjusted EPS surpassed predictions, but its guidance was revised downward, aligning with market sentiment. The full-year projection for net sales growth was lowered to 1%-3%, with adjusted EPS adjusted to $1.54-$1.66. This reflects the company's caution amid current market conditions.

Revenue

In Q2 2025, Mattel's revenue fell to $1.02 billion from $1.08 billion in the same period of 2024. The Barbie segment contributed $200.70 million, Hot Wheels generated $357.30 million, and Fisher-Price added $107.80 million. Other segments combined for $484.70 million, while gross billings reached $1.15 billion.

Earnings/Net Income

Mattel's EPS declined from $0.17 in 2024 Q2 to $0.16 in 2025 Q2. Net income also saw a decrease, settling at $53.35 million, down from $56.86 million the previous year. These figures suggest a challenging quarter for Mattel, with EPS indicating a slight underperformance.

Post-Earnings Price Action Review

The strategy of purchasing Mattel stocks on revenue misses and holding for 30 days yielded moderate returns but fell short of the benchmark, achieving a 78.76% return versus the benchmark's 87.35%. Despite this underperformance, the strategy demonstrated a Sharpe ratio of 0.33, reflecting a reasonable risk-adjusted return. Notably, the strategy incurred a maximum drawdown of 0.00%, effectively avoiding losses during the backtest period. However, volatility was high at 37.08%, indicating significant price fluctuations. The compound annual growth rate (CAGR) stood at 12.39%, suggesting steady growth over the backtest period.

CEO Commentary

Ynon Kreiz, Chairman and CEO of Mattel, highlighted the company's operational strengths amid global trade challenges. He noted strong international growth and an expanded adjusted gross margin, with the Hot Wheels category performing exceptionally well. Kreiz acknowledged difficulties in the U.S. market caused by retailer ordering shifts and trade uncertainties but expressed confidence in Mattel's brand appeal. The company remains committed to innovation and strategic partnerships, including collaborations with OpenAI, to leverage technology for sustained growth and reinforce its entertainment sector presence.

Guidance

Mattel revised its full-year 2025 guidance, forecasting net sales growth between 1% and 3% in constant currency, a decrease from the previous 2% to 3% range. The adjusted EPS is now anticipated to be between $1.54 and $1.66, with free cash flow projected at approximately $500 million, down from the prior guidance of $600 million. The adjusted gross margin target is around 50%, with adjusted operating income estimated to range from $700 million to $750 million, accounting for ongoing market uncertainties.

Additional News

In non-earnings-related news, Mattel announced a significant collaboration with director Jon M. Chu for a live-action Hot Wheels movie, in partnership with Warner Bros. and Bad Robot Productions. This project aims to bring the iconic toy car brand to life in an action-packed film. Additionally, Mattel unveiled a new Barbie doll featuring Type 1 Diabetes representation, expanding its commitment to inclusivity. The company has also partnered with Big Little Feelings to introduce a collection of Fisher-Price play kits designed to support parents through toddler milestones. These initiatives highlight Mattel's focus on strategic partnerships and product diversification.