Mattel to keep roughly half of US toys below $20

Dive Brief:

Toy company Mattel reported net sales in its second quarter were down 6% year over year to a little over $1 billion, according to a Wednesday press release. Net income was also down around 6% to $53.4 million. 
The company revised its full-year guidance. Net sales are now expected to be up 1% to 3%, compared to its previous outlook of between 2% to 3%. 
The company doesn’t expect any additional price increases this year, Chief Financial Officer Paul Ruh told analysts, and between 40% to 50% of the company’s U.S. products will continue to be priced under $20.

Dive Insight:

Mattel’s goal is to keep prices as low as possible, according to executives. 

“We’re committed to the uninterrupted supply for a wide range of high-quality products and providing the right balance of price and value for our customers,” said Ruh, who joined the company roughly two months ago. 

With nearly 80% of toys imported to the U.S. coming from China, the category could prove to be especially vulnerable to the impact of tariffs. That is on top of a consumer base that is already stating prices will impact their purchasing behaviors during the back-to-school season, per an ICSC report. 

However, CEO Ynon Kreiz doesn’t see consumers as any more price sensitive compared to a year ago, as the company has been working “very closely with our retail partners when we consider pricing” headed into the second half of the year and the holiday season. 

The company expects the total tariff exposure for this year before any mitigating actions to be under $100 million. Mattel last quarter forecast a $270 million impact from tariffs. 

The company’s dolls category was particularly impacted during the quarter, declining 19%, primarily due to fewer Barbie product launches. (Though the company earlier this month did release its first Barbie doll with Type 1 diabetes.) Mattel expects to see improving trends with the brand in the latter half of the year. 

Toy competitor Hasbro also reported second quarter earnings this week, with revenue dipping 1% year over year to around $981 million.