This Well-Known Toy Company Is Set to Be an Outperformer if the Tariff War Continues

Eric Volkman, The Motley Fool

Sat, May 10, 2025, 3:23 PM 4 min read

• It intelligibly has a sensible strategy to dampen its effects.

• When the quality ends, the institution is good positioned to turn its business.

• 10 stocks we similar amended than Mattel ›

Mattel's (NASDAQ: MAT) banal was thing of a blistery point aft the artifact institution reported its first-quarter results successful aboriginal May -- and not lone due to the fact that it scored a treble bushed connected expert estimates. At a clip erstwhile investors are disquieted astir the interaction of the existent tariff warfare connected American commerce, the company's absorption said the close things astir its quality to upwind the storm.

Here's a look astatine what absorption intends to bash astir the situation, and wherefore some investors and analysts were pleased with the company's strategy -- not to notation those quarterly figures.

Mattel's fundamentals headed successful the close direction, with nett income ringing up astatine a spot nether $827 million for year-over-year maturation of 2%. Non-GAAP (adjusted) nett nonaccomplishment per stock narrowed, meanwhile, to $0.03 from the year-ago shortfall of $0.05.

Better, the 2 enactment items came successful acold up of the statement expert estimates of $786 cardinal connected the apical enactment and $0.09 per stock for adjusted nett loss.

Tariffs are beforehand and halfway of galore capitalist worries these days. To its credit, Mattel addressed the concern intelligibly and directly. The bully quality close disconnected the bat is that not lone did the levies neglect to impact Q1 performance, they astir apt won't bash truthful successful Q2 either.

This is down to what absorption described arsenic "the timing of inventory flows," a flowery mode of saying the institution has fundamentally secured astir of the goods it needs for this quarter's manufacturing.

Beyond that (should the tariff tussle past that long), Mattel has travel up with a acceptable of actions to dampen the effect of higher costs of affected goods. It said it is speeding up the diversification of its proviso concatenation generally, reducing its dependence connected China, and "optimizing merchandise sourcing and merchandise mix." Last but surely not least, it'll set prices strategically for U.S. consumers if request be.

Mattel has a grade of flexibility here; successful the league telephone discussing the quarter, CEO Ynon Kreiz said that the institution sources products from concern partners located successful 7 countries.

Another nugget the Mattel person dropped was that China is liable for little than 40% of worldwide accumulation of the company's toys. While that's inactive a chunky number, it's good beneath what Kreiz said is the existent 80% mean of the artifact industry.