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Summary of diving:
- Toy makers Hasbro and Mattel faced challenges due to delays in retail orders during the third quarter, but are starting to see early signs of a rebound for the holiday season.
- They have orders “significant acceleration” Since the beginning of last month, Mattel CEO Yon Kreis said on an Oct. 21 earnings call. Earlier, model order delays affected the company’s third-quarter sales of $1.7 billion, down 6 percent from a year earlier.
- Meanwhile, Hasbro is seeing sales momentum increase more than “probably.” The last seven to eight weeksCEO Chris Cox said in a separate October earnings call
Diving Insights:
As tariffs and trade uncertainty pushed up costs, retailers empty Their inventories and delayed purchase orders at Hasbro and Mattel led to a summer slowdown. Delays continued through most of the third quarter, but executives explained the situation began improve in September and October.
“Retailers are restocking to meet expected consumer demand … so this all bodes well for a strong holiday season as well as a good end to the year,” Mattel CFO Paul Ruh said on the call.
After raising prices to offset the effects of the tariffs in the second quarter, Ruh said Mattel does not plan to raise more for the rest of the year. Looking ahead to 2026, he said the company has not yet decided on a price increase, but is evaluating a range of levers to offset the impact.
Toymakers have historically relied on China as a manufacturing hub, taking advantage of its robust and cost-effective operations, but tariffs and trade uncertainty have made doing business there more risky.
To reduce risk, Hasbro has tried to reduce its exposure to China by moving its operations closer to the United States. The company plans to source 30 percent of its total toy and game revenue from China by 2026 as part of the tariff reform playbook, CFO Gina Guter said on the call. This is done A reduction of about 50 percent At the beginning of the year, Hasbro is also trying to establish 30% of its revenue in the United States by next year.
“We’re really leveraging all of our leverage from how we think about pricing, how we think about product mix, how we think about supply chain and how we manage all of our operating costs to mitigate and offset the impact,” Guter said.
Guter said Hasbro faced an estimated $20 million impact from the tariff costs in the third quarter and expects a $60 million impact for the full year. Motel said last quarter that the impact of its tariff, excluding mitigation measures, would be less than $100 million for the year.
While these companies work in the current economic and geopolitical context, the United States and China last week Reached a consensus agreement on tariffs and other trade-related priorities which can eliminate trade barriers between countries.
“Typically what we see in September and October is a pretty good predictor of what’s going to happen over the holidays,” Cooks said.
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