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Mattel cuts annual forecasts as new CEO takes charge

By Reuters News
Hot Wheels and Matchbox cars, brands owned by Mattel, Inc., are pictured for sale in a store in Manhattan, New York City, U.S., November 30, 2021. REUTERS/Andrew Kelly/File Photo

Nov 5 (Reuters) - Mattel MAT.O on Thursday slashed its annual sales and profit forecasts ahead of the crucial holiday season, as new CEO Roger Lynch takes on the task of turning around the Barbie maker amid mounting investor pressure.

Shares of the company fell 4% in extended market trading.

Toymakers are navigating sluggish holiday demand as US consumers struggling with higher energy costs cut back on discretionary spending.

Mattel is pursuing an IP-forward strategy aimed at expanding brands such as Barbie, Hot Wheels and UNO across entertainment, licensing and consumer products to generate growth beyond traditional toy sales.

"I also see clearly where we must improve. We will focus our resources on our greatest opportunities," Lynch said in a statement.

Mattel now expects fiscal 2026 sales to grow in the range of 1% to 4%, compared with its previous projection of a 3% to 6% rise. It also lowered its annual adjusted profit forecast to between $1.05 and $1.20 per share, from $1.27 to $1.39 previously.

The outlook excludes the benefit of tariff refunds recognized so far this year as well as any additional refunds that may be received during the remainder of 2026, the company said.

Mattel is also grappling with a significant leadership transition.

Former Vogue and Condé Nast top boss Lynch assumed charge earlier this week after longtime CEO Ynon Kreiz left in October, while the company also named Amgen executive Peter Griffith finance chief to succeed Paul Ruh.

On Thursday, the company named insider Steve Totzke as chief operating officer, effective November 11.

Meanwhile, shareholders including Ariel Investments and Southeastern Asset Management have urged Mattel to explore strategic alternatives, including a potential sale.

Third-quarter adjusted gross margin expanded to 55.0% from 50.2% a year earlier, aided by $88 million in tariff refunds.

Net sales rose 4% to $1.81 billion in the quarter ended September 30, but missed analysts' expectations of $1.84 billion, according to LSEG data. Adjusted earnings of $1.30 per share topped estimates of 94 cents.

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