Mattel Reports 2% Net Sales Increase but Wider Net Loss in Q1 2025

Mattel, Inc. reported a net sales increase of 2% for the first quarter of 2025, reaching $826.6 million compared to $809.5 million in the same period last year. The company's gross profit also saw a rise, climbing to $408.1 million, which translates to a gross margin of 49.4%, up from 48.0% in the prior year. However, Mattel recorded a net loss of $40.3 million, or $(0.12) per share, compared to a net loss of $28.3 million, or $(0.08) per share, in the first quarter of 2024. The increase in net loss was attributed to higher selling and administrative expenses, which rose to $390.9 million from $352.9 million, largely due to restructuring charges and litigation costs.

In terms of operational performance, Mattel's North America segment generated $491.4 million in net sales, a 3% increase from $477.8 million in the previous year, while the International segment saw a modest 1% increase to $335.3 million. The growth in North America was driven by higher gross billings in the Dolls and Action Figures categories, while the International segment benefited from increased sales in Vehicles and Action Figures, despite declines in Dolls and Infant, Toddler, and Preschool categories. The company reported a significant improvement in operating income for the International segment, which surged to $23.3 million from $9.3 million year-over-year.

Mattel's balance sheet as of March 31, 2025, showed total assets of $6.21 billion, a slight increase from $6.07 billion a year earlier. The company maintained a cash balance of $1.24 billion, up from $1.13 billion in the same quarter last year, despite significant share repurchases totaling $160 million over the past year. Accounts receivable decreased to $633.3 million from $1 billion at the end of 2024, reflecting seasonal trends in collections. Inventories increased to $658.4 million, primarily due to seasonal buildup in preparation for upcoming sales.

Strategically, Mattel is implementing its "Optimizing for Profitable Growth" (OPG) program, which aims to achieve $200 million in annual gross cost savings by 2026. This initiative includes restructuring efforts, such as discontinuing production at a plant in China, and is expected to enhance operational efficiency. The company has already recorded approximately $94 million in cumulative restructuring charges related to this program. Additionally, Mattel is navigating a challenging macroeconomic environment characterized by inflation and fluctuating consumer demand, which may impact future performance.

Looking ahead, Mattel remains cautious about the potential impacts of global trade policies and economic conditions on its business. The company is actively evaluating its supply chain and pricing strategies to mitigate anticipated cost increases. Despite these challenges, Mattel's management expressed confidence in its ability to leverage its strong brand portfolio and operational initiatives to drive future growth.