Tariff Delay Sell-Off: Tactical Plays on Retail, Tilray, and Mattel

The immediate market reaction was sharp and specific. When the Supreme Court delayed its anticipated tariff ruling, major retailers sold off. Under Armour Inc. and Kohl's Corp. both tumbled as much as 6% on the news, with a broader group of names like Lululemon and Best Buy also falling.

This move represents a clear reversal of a pre-emptive rally. Investors had already priced in potential margin relief, driving stocks higher yesterday in anticipation of a favorable decision. The delay simply caused them to give back today those gains, creating a tactical overreaction.

The magnitude of the potential upside, however, remains substantial. The ruling's delay doesn't change the underlying exposure. Hundreds of companies have already sued for refunds if the tariffs are overturned, including giants like Costco and Goodyear. For retailers, the path to margin recovery is clear and quantifiable if the court ultimately sides with the challengers.

Tilray: Earnings Beat vs. Expectations

The earnings report for fiscal 2025 was a clear operational beat, providing a tangible catalyst for the stock. The company posted fiscal year net revenue of $821 million, with a standout performance in its international cannabis segment, which saw revenue increase 71% in the fourth quarter. More importantly, the company demonstrated significant margin improvement, with global cannabis gross margin expanding by ~700 basis points in the fiscal year.

This operational progress is backed by a strengthened balance sheet. Management highlighted total debt repayments of ~$100 million to date and a cash position of $256 million in cash and marketable securities. This financial engineering-reducing leverage while building a war chest-creates a more stable platform for growth.

The forward signal is the key. Management provided fiscal year 2026 adjusted EBITDA guidance of $62 million to $72 million. That range represents a clear path toward profitability, contingent on sustained execution. For a tactical investor, this report separates the real progress from the hype. The beat on revenue and margins, coupled with a stronger balance sheet, shows the company is delivering on its strategic plan. The guidance then sets the next hurdle: hitting those EBITDA targets will be the true test of whether this operational momentum can translate into sustained financial improvement.

Mattel: Downgrade Catalyst and Price Target

The Mattel story is now a textbook case of multiple headwinds converging. The stock's recent outperformance has drawn a fresh wave of caution from Wall Street, with both CFRA and Goldman Sachs delivering downgrades that spell out the specific pressures at play.

CFRA's move to a Hold rating is the most direct. The firm cited elevated tariffs, increased promotional activity, and declines in Mattel's Dolls and Infant, Toddler & Preschool segments as key factors. The numbers behind those declines are stark: Dolls gross billings declined 11% year-over-year and the Infant/Toddler segment fell 25%. This operational weakness was compounded by a revenue miss, with Q3 sales coming in $101 million below estimates. The result was a compression of adjusted gross margin by 290 basis points, a clear sign of margin pressure from the very factors cited.

Goldman Sachs' downgrade to Neutral adds a layer of tactical framing. The bank noted the stock's recent outperformance-a gain of roughly 9% versus the S&P 500's 2%-leaves less room for multiple expansion. More critically, it highlighted the risk of pricing elasticity biting as promotions fade. With tariff-related price increases already an overhang, the bank warns that higher prices are increasingly being borne by consumers, which could further dampen demand.

Together, these catalysts form a clear warning for the consumer discretionary sector. Mattel's experience-tariff costs, promotional spending to move inventory, and segment-specific demand weakness-mirrors pressures facing many retailers and consumer goods companies. The downgrades are a reminder that even companies with strong brands are vulnerable when macroeconomic headwinds meet a promotional cycle. For now, the setup suggests the stock's recent rally may have run ahead of its fundamentals.

Risk/Reward Setup and Catalysts

The tactical plays for these three stocks now hinge on specific, near-term events. For retailers, the catalyst is the Supreme Court's tariff ruling, expected within the next two weeks. The court hasn't said when it will issue its next opinion but could schedule more releases in the next two weeks. A favorable decision would validate the margin recovery thesis, while a delay or unfavorable ruling would confirm the headwinds. The stock action today shows how sensitive the setup is to this binary outcome.

For Tilray, the catalyst is execution. The company has set a clear target: fiscal year 2026 adjusted EBITDA expected to be between $62 million and $72 million. The stock's recent momentum is built on the operational beat and margin expansion seen in fiscal 2025. The coming quarters will test whether that progress can be sustained and converted into the guided profitability. Continued strength in international markets, which drove a 71% Q4 revenue jump, will be a key indicator.

Mattel's catalyst is consumer demand. The downgrade warnings center on pricing elasticity and pressure on lower-income shoppers. Goldman Sachs flagged that sales trends in the first half of 2026 will be key to gauging how much pricing elasticity is starting to bite. With tariff-related price increases already an overhang, the company's ability to maintain sales volume without heavy promotions will determine if the recent outperformance is sustainable. The first half results will provide the first concrete data point on this risk.

In each case, the near-term catalyst is a specific, time-bound event that will either confirm or challenge the current investment thesis. For the tactical investor, these are the milestones to watch.