Mattel's Q4 2024: Navigating Tariff Challenges, Gross Margin Shifts, and Industry Outlook

These are the key contradictions discussed in Mattel's latest 2024Q4 earnings call, specifically including: Tariff Exposure and Supply Chain Management, Gross Margin Expectations, Toy Industry Growth Outlook, and Supply Chain Management:



Strong Financial Performance:
- Mattel reported net sales declined 0.5% in constant currency for the full year, but achieved significant improvements in key financial metrics, including a 340 basis point increase in adjusted gross margin, 12% growth in adjusted EPS, and free cash flow of nearly $600 million.
- Growth was driven by a focus on profitable growth, expanding gross margins, and generating strong free cash flow.

Product Category Growth and Challenges:
- Vehicles, particularly Hot Wheels, achieved seven consecutive record years, while Action Figures and Games saw double-digit growth.
- Dolls and Infant, Toddler, and Preschool categories faced declines due to decreasing demand for Power Wheels and Baby Gear products.

Entertainment Strategy Expansion:
- Mattel's entertainment strategy saw progress with Netflix shows like Hot Wheels Let's Race and Barbie's animated premieres ranking high.
- Initiatives include new movie developments like Masters of the Universe and upcoming games, leveraging IP-driven growth and digital game self-publishing.

Supply Chain and Tariff Mitigation:
- The company's supply chain strategy includes diversifying production across countries like China, Mexico, and Canada to mitigate tariff impacts.
- Mattel is prepared to leverage supply chain efficiency and pricing actions to counterbalance the anticipated tariff impact on 2025 results.