By Sanskriti Shekhar
Nov 5 (Reuters) - Mattel on Thursday slashed its annual sales and profit forecasts ahead of the crucial holiday season, raising the stakes for new CEO Roger Lynch as he steers the Barbie maker through tepid demand and investor pressure.
Toymakers are bracing for sluggish demand during the all-important holiday sales as rising raw material costs from the Iran war lift prices while US consumers rein in discretionary spending on higher energy costs and inflation.
Mattel said sales
softened toward the end of the third quarter and that the weakness had persisted into the fourth.
Shares of the company fell about 6% in extended market trading.
The company is doubling down on efforts to transition from a traditional toymaker through its IP-forward strategy aimed at expanding its brands such as Hot Wheels and UNO across entertainment, licensing and consumer products.
"Mattel has very strong brands, really talented people, and I think a significant long-term opportunity," Lynch said on a post-earnings call.
The company now expects fiscal 2026 sales growth of 1% to 4%, compared with its previous projection of a 3% to 6% rise. It also lowered its annual adjusted profit forecast to $1.05 to $1.20 per share, from $1.27 to $1.39.
The estimate excludes the benefit of tariff refunds recognized so far this year and any additional refunds that may be received during the remainder of 2026, the company said.
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 third quarter, but missed analysts' expectations of $1.84 billion, according to LSEG data. Adjusted earnings of $1.30 per share topped estimates of 94 cents.
"The results also highlight how uneven the business has become. Hot Wheels is holding up, but Barbie sales are slipping and Fisher-Price continues to struggle," analysts at eMarketer said.
In the latest shakeup at the top, the company on Thursday named insider Steve Totzke as chief operating officer.
Earlier this week, former Condé Nast chief Lynch assumed charge after longtime CEO Ynon Kreiz exited in October. Amgen executive Peter Griffith became the finance chief in October.
Meanwhile, shareholders including Ariel Investments and Southeastern Asset Management have urged Mattel to explore strategic alternatives, including a potential sale.
(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Sriraj Kalluvila)
