The contrast: Hasbro and Mattel are heading into the holiday season on diverging paths.

• Hasbro beat analysts’ Q3 expectations and raised its full-year revenue and profit forecasts, driven by strong demand in its Wizards of the Coast and digital gaming divisions.
• Mattel, meanwhile, missed both revenue and profit targets and held its outlook steady. The company cited challenges from tariffs and shifts in retailer behavior, noting that merchants are ordering later and more cautiously. Rather than placing large factory orders in Q3 as in past years, retailers are waiting until Q4 to restock domestically, aiming to avoid excess inventory ahead of the holidays.

Hasbro’s strategy: While Hasbro also faced some of these pressures, it benefited from a more diversified product mix.

• Its Wizards of the Coast and digital gaming segment grew 42% YoY, led by Magic: The Gathering sales, which were up 55% on the strength of new releases, backlist title demand, and continued momentum from Secret Lair.
• Licensed digital gaming revenues rose 21%.
• Those gains helped Hasbro partly offset a 7% decline in toy sales due to the shift in order timing.

The state of the toy industry: Mattel CEO Ynon Kreiz noted that the toy industry expanded at a high single-digit pace in Q3, outpacing the low single-digit gains of recent years.

Still, the sector faces significant headwinds, particularly in the US, as the holiday season approaches. A cooling labor market, fragile consumer confidence, and higher interest rates are restraining discretionary spending, including on toys.

Tariffs add to the pressure on toy manufacturers, as roughly 80% of toys sold in the US are sourced from China, according to The Toy Association. While that share is considerably lower for Hasbro and Mattel, it remains a meaningful challenge.

Our take: The Q3 drag from later retailer orders should be a tailwind in Q4 as merchants restock before the holidays.

However, consumers’ price sensitivity remains a risk. The vast majority, 84%, of US mothers are concerned about higher toy prices due to tariffs, and more than half worry about limited choices, per an April 2025 BSM Media survey. That suggests shoppers may trade down or wait for discounts, adding pressure to margins.

Hasbro’s digital and gaming exposure gives it more cushion if toy sales soften, while Mattel’s sharper focus on core toy lines could leave it more exposed to a cautious consumer.