Mattel’s second quarter had plenty of winners on the shelf, even as tariffs and higher spending put pressure on profitability for the company named “Manufacturer of the Year” in The Toy Book‘s 2026 Pulse of Play Awards.
Net sales reached $1.13 billion, up 10% year over year on a reported basis and 9% in constant currency. Sales in North America spiked 12%, while international sales rose 9%, as reported.
“We continued to execute our multi-year strategy to grow our IP-driven play and family entertainment business in the second quarter with strong growth in net sales,” said Mattel Chairman and CEO Ynon Kreiz. “Growth has continued in the third quarter, and we expect to achieve our full-year 2026 guidance. Our world-class brand portfolio and product offering, driven by our brand-centric operating model and global capabilities, position us well for the second half of the year.”
Hot Wheels remained one of Mattel’s biggest engines. Vehicles’ gross billings climbed 14% to $463 million, or 11% in constant currency, as the brand grew with both kids and adult collectors. Mattel expects Hot Wheels to deliver its ninth consecutive record year, with potential for further upside in the years ahead as the brand transcends the toy aisle into car culture and lifestyle. This fall will see an additional spike in vehicle sales as Matchbox The Movie debuts on AppleTV in October.
The company’s Action Figures, Building Sets, Games, and Other category posted the quarter’s largest increase, with gross billings surging 35% to $358 million.
On an earnings call with analysts this afternoon, Kreiz and his team leaned into the strength of the action figures category as a whole, including strong performance from Toy Story 5, WWE, and early shipments from Mattel’s relaunched line inspired by DC superheroes and villains. The biggest winner came straight out of Eternia as the Masters of the Universe brand has more than tripled its sales this year, fueled by the performance of the live-action film from Amazon MGM Studios. When pressed about perceived underperformance at the box office, Kreiz reiterated the company’s long-term plan, noting that Masters of the Universe was not only the No. 1 streaming title on Amazon’s Prime Video upon its launch but also the No. 1 streaming film across all platforms globally.
“Because of the movie, we expect Masters of the Universe to be a massive action figure brand for Mattel going into the future,” Kreiz said. “This will be an important brand for 2026 and beyond. We own the IP. We own the underlying IP. We need to ignite it and delight fans.”
Games’ growth came primarily from UNO and Mattel 163’s contribution. Mattel Brick Shop also performed well during the quarter as the building and construction category continues to grow within the greater toy industry.
Dolls gross billings declined 5% to $318 million. Lower Barbie and Polly Pocket sales were partially offset by growth tied to KPop Demon Hunters, Disney Princess, and Frozen. Mattel expects Barbie to return to growth in 2027. On the call, execs pointed to borrowing from the Hot Wheels playbook to boost Barbie, while working on plans tied to six classic Barbie animated films, similar to this year’s program tied to the 25th anniversary of Barbie in the Nutcracker.
Infant, Toddler, and Preschool fell 11% to $128 million, largely due to Fisher-Price. Little People offered a bright spot, growing by high double digits behind new partnerships. Execs believe that Little People could “become a more meaningful” business going forward.
Mattel also advanced its entertainment and digital strategy. In addition to launching Masters of the Universe globally, it launched its first self-published mobile game and placed a second title into soft launch. The integration of Mattel163 remains underway.
While there were high moments in Q2, the stronger sales quarter came at a cost. Gross margin declined to 48.2% as tariffs, inflation, higher royalties, and unfavorable foreign exchange weighed on results. Mattel reported operating income of $11 million and a net loss of $18 million.
The company maintained its 2026 guidance and reaffirmed its $400 million share repurchase target.
“2027 is shaping up to be a big year for the company. 2026 has been an investment year,” Kreiz said. “And to be clear, we’re not stopping there. This is the beginning.”
Next year will see the debut of Mattel’s extensive Teenage Mutant Ninja Turtles collection, products tied to Disney Animation’s Frozen 3, and a full year of execution on both DC and KPop Demon Hunters.
