Mattel, which owns toy brands such as Barbie, Hot Wheels, Fisher-Price, etc., recently garnered worldwide attention after its viral “Barbie” movie broke box office records and became the highest-grossing film in 2023, earning over $1.4 billion worldwide.
The toymaker, however, recently faced a slight dip in sales for its most popular product as the momentum over the film died down. In Mattel’s fourth-quarter earnings report for 2024, it revealed that its net sales in the U.S. only increased 1% year-over-year during the holiday season.
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The company claimed that while its Hot Wheels toys, action figures and games showed growth during the quarter, it did see declines in its infant, toddler and preschool products. It also noted that its doll sales shrunk, primarily due to low Barbie sales.
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During an earnings call on Feb. 4, Mattel Chief Financial Officer Anthony DiSilvestro claimed that the decrease in doll sales comes during a time when the company is wrapping “the Barbie movie benefits from the prior year.”
Mattel contemplates a major change to its pricing
Amid this recent decline in doll sales, Mattel issued a stern warning about its future pricing after President Donald Trump implemented a major change.
On Feb. 4, Trump imposed a 10% tariff on all goods imported from China, and in response, China imposed tariffs on a number of American imports. Tariffs are taxes companies pay to import goods from overseas, and the extra cost is often passed down to consumers.
Mattel Inc. brand Barbie toys for sale at a Target store on Black Friday in Chicago, Illinois, US, on Friday, Nov. 25, 2022.
Trump also threatened to impose 25% tariffs on all goods from Mexico and Canada on Feb. 4, but he agreed to delay this decision for 30 days.
Many consumers and economists have expressed concern about the domino effect tariffs could have on consumers’ wallets and the economy as a whole. Some of the top U.S. imports from China include cell phones, computers, toys, games, clothing, etc.
During the earnings call, DiSilvestro revealed that Mattel is anticipating the impact of the recent tariffs on China and possibly on Mexico and Canada. He said that the company was taking “mitigating actions” such as “leveraging the strength” of its supply chain and weighing “potential price increases.”
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“We do work closely with our retail partners here to achieve the right balance and always keep consumers in mind when we consider pricing actions,” said DiSilvestro.
He also said that the company has been “continuously optimizing and diversifying” its manufacturing footprint and sources its products from seven different countries.
“In 2025, we expect China will represent less than 40% of global production for our toys and as compared to an industry average of about 80%,” said DiSilvestro. “And with the U.S. representing about half of our global toy sales, our tariff exposure in the U.S. related to China should be about 20% of global production.”
A girl looks at Mattel Inc. Fisher-Price brand toys on display for sale at a Target Corp. store in the Queens borough of New York, U.S, on Thursday, Nov. 28, 2019.
DiSilvestro also said that Mattel sources less than 10% of its toys from Mexico and does not source from Canada.
“By 2027, no single country is expected to represent more than about 25% of total global production or about half of that in terms of U.S. sales,” said DiSilvestro. “Now, with respect to the tariffs, our teams have been fully engaged in analyzing and planning for a range of scenarios.”
Trump’s tariffs can have unintended consequences
Many companies such as Walmart, AutoZone, and Best Buy have also previously warned that they are contemplating increasing their prices due to Trump’s tariffs.
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These tariffs are predicted to have a major impact on the economy. A recent study from the Tax Foundation estimates that the tariffs on China, Mexico, and Canada that were proposed to go into effect on Feb. 4 would decrease economic output, the value of all sales of goods and services, by 0.4%.
It also predicts that these tariffs will increase taxes by $1.1 trillion between 2025 and 2034 on a conventional basis, totaling an average tax increase of more than $800 per U.S. household in 2025.
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