Toy Companies Look Ahead to Holiday Sales   

By Mark Seavy

Despite tariffs, price increases, and shifts in retail orders, toy companies like Hasbro and Mattel are forecasting strong holiday sales.  

The toymakers, in releasing Q3 financial results last week, projected that Q4 sales will increase by a percentage in the mid-teens with little slowdown in consumer demand.  

The sales gains will come despite many retailers having shifted to domestic shipping in drawing inventory from toymakers’ warehouses rather than direct importing from China, which was the preferred method in past years, company executives said. Those changes mean “just-in-time and more frequent orders” from retailers, many of whom have delayed product deliveries until late September and early Q4 (which started this month), said Mattel CEO Ynon Kreiz.   

As a result, Mattel reported “accelerating sales” in the last seven to eight weeks of Q3, Kreiz said. In fact, Mattel is expected to post a 12.5% increase in Q4 sales, enabling it to report a 1-3% gain in revenue for the year, according to analysts. Mattel also reported a 6% decline in net sales ($1.74 billion) as net income declined to $278.4 million from $372.4 million a year ago.  

Hasbro, meanwhile, projected a “high-single digit” percentage gain in sales for the year, fueled by a 44% gain in revenue from its Wizards of the Coast (Dungeons & Dragons and Magic the Gathering) business as its core consumer products decline 5-8%, Hasbro CFO Gina Goetter said. In Q3, Hasbro posted a gain in net income to reach $233.9 million (up from $223.7 million a year earlier) as revenue increased 8% to $1.4 billion.   

“The business hasn’t seen this implied level of Q4 sales in more than a decade, but it is worth remembering that September and October are the key shipment months for holiday orders [while] November and December are more about replenishment,” said Megan Christine Alexander, an analyst at Morgan Stanley. “That means that modest changes in shipments, even week-to-week, can have a sizeable impact on quarterly results.”  

While Mattel and Hasbro imposed tariff-related wholesale price increase in Q2 and Q3, those were applied to licensed products tied to content for brands like Jurassic World and Minecraft, company executives said. The price increase led to a “mid-single digit” percentage gain, starting with late August product resets at retailers, Goetter said. About 40-50% of Hasbro’s products retail for less than $20, said CEO Chris Cocks.  

“Consumers are more alert and aware of deals,” Bill Simon, President of Walmart’s U.S. Division, told CNBC. “Retailers that pushed through price increases too quickly were hurt because the consumer is in charge now. We are seeing suppliers with an ability to mitigate the tariff costs, and they are spreading the cost over a larger base of products.”  

If tariffs on products imported from Vietnam and China remain in the 20-30% range, it will shave “a couple percentage points” off Hasbro’s gross margins, which were 25.6% in Q3, Cocks said. In light of tariffs, Hasbro is forecasting that 30% of its toy and game revenue will be sourced from factories in China by 2026 (down from 50% at the start of the year) and another 30% from plants in the U.S., Cocks said.  

“We have been pretty surgical in where we have chosen to price,” Cocks said. “We are trying to hit price points where consumers tend to be a little less price sensitive, particularly under the kind of the $15-$20 threshold. The top 20% of households continue to spend robustly and we have a nice fan business with them in trading cards and gaming. The balance of households is watching their wallets a bit more and are more promotional and price sensitive.”  

As Hasbro and Mattel navigate a changing market, their business appears to have become less reliant on the traditional toy business.   

Hasbro’s Magic the Gathering revenue rose 42% ($572 million) in Q3, offsetting a 7% decline in consumer products ($797 million), which included Fisher-Price. Magic the Gathering has benefitted from collaborations, including those planned with Teenage Mutant Ninja Turtles, The Hobbit, Star Trek, and Marvel, all of which brought new business in mass and convenience stores. The toymaker is also building out a mobile gaming business that includes titles like Scopely’s Monopoly Go! and Gameberry Labs’ Sorry! World. Hasbro is also creating its own digital games (the role-playing title Exodus is due in 2026, for example).   

Mattel, meanwhile, is also readying a self-publishing business for 2026, again marking a return to internal development. Its Magic123 joint venture with NetEase recently released its fourth title, Uno Wonder. Three licensed titles are being developed for consoles and PCs based on Hot Wheels (GameMill Entertainment), Masters of the Universe (Limited Run Games), and Barbie (Outright Games).