Mattel Brands Continue to Resonate With Consumers, Supporting Demand Despite Macro Uncertainty

Mattel continues to harvest gains from its turnaround, delivering above break-even operating margins starting in 2019 and reaching around 12% in 2023. Despite the expectation of little sales growth, we expect Mattel to produce further operating margin expansion in 2024, thanks to its $200 million cost-saving program (2024-26). Additionally, the firm's shift to a capital-light strategy has provided lower capital and operating expenditures than in the past (supporting profit growth while allowing for investment in product innovation), but profits could be hurt by tactical investments in dolls and vehicles as well as logistics and input cost inflation.