Why Hasbro Is Winning the Toy Wars and Mattel Isn’t

Mattel stock is falling further behind Hasbro, even as Mattel topped Wall Street’s second-quarter sales estimate. Tariffs and heavier marketing spending erased its profit margin.

The results widen the gap with its rival. Hasbro’s digital gaming and licensing bets keep paying off.

Net sales reached $1.12 billion, beating the $1.10 billion analysts expected. That figure came from data compiled by the London Stock Exchange Group (LSEG). Adjusted profit landed at just 1 cent per share, well short of the 4-cent estimate.

Mattel Stock Falls Behind as Tariffs Squeeze Margins

The miss came down to costs, not demand. Adjusted gross margin fell 260 basis points, or hundredths of a percentage point, to 48.6%. Mattel pointed to tariffs, inflation, higher royalty expenses, and unfavorable currency swings.

Advertising and promotion spending jumped 57% from a year earlier. Adjusted operating income fell 60% as a result. Mattel shares rose about 1% in after-hours trading, though they remain down 25% for the year.

A Reuters chart tracking the shares since October 2024, rebased to 100, shows just how wide that gap has grown. Hasbro trades near 143.75, and the S&P 500 sits at 144.93, while Mattel has slipped to 77.8.

CEO Ynon Kreiz defended the underlying strategy despite the profit miss.

“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.”

Jefferies analysts called the revenue outlook increasingly achievable given a solid first half and steady consumer demand. They cautioned that tariff pressure and heavier brand spending could still limit how much of that growth reaches the bottom line.

Mattel reaffirmed its full-year guidance. It expects $1.27 to $1.39 in adjusted earnings per share and sales growth of 3% to 6%. That outlook excludes any benefit from potential US tariff refunds. Apple, by contrast, recently booked a lift from tariff refunds in its own earnings report.

Mattel stock performance vs Hasbro and the S&P 500. Source: Reuters

Hasbro’s Digital Pivot Pulls Ahead

Hasbro tells a different story. Last month, the rival toymaker raised its annual revenue and profit forecasts. It cited resilient digital gaming demand and continued strength in Magic: The Gathering.

This year’s earnings season keeps repeating that pattern. Companies leaning into licensing and digital revenue are generally outperforming rivals tied to old-fashioned retail volume. That dynamic also helped Magnum’s ice cream earnings beat despite similar cost pressures.

Meanwhile, Spider-Man: Brand New Day opened to a record $360 million domestic weekend, topping Avengers: Endgame. Hasbro holds the Marvel toy license. Its action-figure lines stand to capture some of that demand. Licensing exposure has split winners from laggards among tariff-hit tech stocks too.

Mattel is not standing still on that front. A Mattel executive told analysts on the earnings call that the company’s own intellectual property, partner brands, and digital games are becoming central to its growth plan.

Whether that pivot narrows the gap with Hasbro likely depends on how quickly tariff costs ease.

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