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Big US toymakers said they are accelerating efforts to diversify away from China as they warned tariffs would weigh on financial performance this year.
Mattel, the toymaker behind Barbie dolls and Hot Wheels, said it expected its US imports from China to decline to below 10 per cent by 2027, from less than 20 per cent currently. Monopoly-maker Hasbro said it planned to cut its China exposure by 10 per cent to less than 40 per cent of imports by 2027.
“This is really about diversifying our supply chain and making sure we have the right balance across different countries,” Mattel chief executive Ynon Kreiz told the Financial Times.
The move comes as Mattel raised prices in the second quarter as part of its response to shifting “global trade dynamics”, though it does not plan on additional price increases this year.
Still, Kreiz said some manufacturing would continue in China.
“We make quality products in China and we have a good relationship and good foundation there for the supply chain,” Kreiz said, adding that he planned to use China-made goods as a source for other countries outside of the US.
While tariffs on Chinese goods have eased from the rates announced in April, the uncertainty surrounding the levies affected Mattel and Hasbro’s business in the US.
Hasbro chief executive Chris Cocks said tariffs were still a challenge but that the current rates — China at 30 per cent and Vietnam at 20 per cent — were more favourable than previously expected.
The toymaker expects $60mn in tariff-related expenses for 2025, an improvement from previous modelling that forecast a net impact of up to $180mn.
“We are compensating for these costs through a combination of cost reductions, rebalancing our marketing spend, diversifying our supplier mix and implementing some targeted pricing actions,” Cocks told investors on Wednesday.
Mattel trimmed full-year guidance and expects announced tariffs to have a less than $100mn impact. It anticipates that net sales will grow between 1-3 per cent for the fiscal year, compared with previous guidance of 2-3 per cent. Adjusted earnings per share are forecast to be in the range of $1.54-$1.66, down from previous expectations that ranged between $1.66-$1.72.
The company reported that net sales fell 6 per cent to $1.02bn, just shy of analyst expectations for $1.05bn. The decline was driven by a 16 per cent fall in North American sales that was only partially offset by a 7 per cent gain in international markets.
Mattel said the value of dolls shipped to retailers fell 19 per cent from the year-ago quarter, driven by weak demand for Barbie products because of fewer new launches and less promotional activity. Billings for toddler and pre-school products dropped 25 per cent, largely due to disrupted retail ordering patterns. The company expects to recover the delayed billings in the second half of the year.
