As trade and manufacturing uncertainties disrupt the toy industry, even a giant like Mattel Inc. is feeling the squeeze.

The El Segundo-based toymaker, famous for Barbie and Hot Wheels, is laying off 89 employees by Jan. 12. According to a Mattel spokesperson, the layoff is part of an effort to restructure its global brands team, which faced a leadership change in September. That was when Roberto Stanichi was promoted to executive vice president and chief global brand officer, replacing Lisa McKnight.

“The goal is to manage our brands holistically and create closer alignment between our toy and entertainment businesses,” Chief Executive Ynon Kreiz said in Mattel’s third quarter earnings call in October. “By the time this organization is vetted, we are very confident that we have the right team to capture the full potential of our brand offering and continue to innovate and excite our fans with great products and great experiences.”

Kreiz also said that Mattel’s success in toys and entertainment would drive each other, noting that “the opportunity now is to fully capitalize on this virtuous cycle.”

The notice came from a Worker Adjustment and Retraining Notification report filed last month, which employers are legally required to submit to the state’s Employment Development Department before a mass layoff. Most of the affected employees hold senior or executive titles, including key positions on Barbie, action figures and games teams.

Mattel has declined to share an updated team size.

Prior layoff notices indicate that Mattel has cut 439 employees from its El Segundo headquarters since 2020. The prior wave, in March, laid off 120 employees, many of whom worked in marketing, design and social media management. That cut represented about 35% of its non-manufacturing workforce.

Turbulent year

The layoffs have come in a rough fiscal year for Mattel, where its U.S. business was “challenged by industry-wide shifts in retailer ordering patterns,” according to Kreiz.

The toymaker missed revenue expectations by $100.95 million and earnings per share by $0.17 in the third quarter, bringing its revenue down to $1.74 billion, a 6% decrease from last year. Its net income decreased by $94 million, totaling $278 million.

Key Mattel franchises also suffered, with Barbie declining by 17% and Fisher-Price falling by 19% in global sales during the third quarter, compared to last year.

With tariffs in full swing, retailers have been reluctant to take risks, placing strains on suppliers such as Mattel, said D.A. Davidson Cos. analyst Keegan Cox.

“The retailers, being the customers of Mattel, were being very cautious in their ordering trends,” Cox said. “They didn’t really want to order goods that were going to get tariffs surcharged.”

He also noted that this resulted in a delay in orders for the holiday season, which contributed to the declining sales data as more deals were pushed to a later date.

The recent layoffs may be related to cost saving initiatives on Mattel’s side, Cox added. Early last year, the toymaker announced a target to save $200 million by the end of 2026. It also announced a partnership with OpenAI in June 2025.

“They’re essentially trying to reduce the operating costs in the business. I’ve talked to them about that OpenAI partnership. It helps them reduce some of the paperwork and design work in making toys,” said Cox.

Mattel has tried to offset costs from higher tariffs by raising its prices in the U.S. earlier this year. Toy Association Inc. currently reports a combined tariff rate on Chinese toy imports at 20% after President Donald Trump and Chinese President Xi Jinping met in October.

An unexpected advantage

With the holiday season ramping up toy sales, some analysts are still hopeful that Mattel will have a rebound in the fourth quarter and beyond.

“Yes, it’s not easy to withstand all the shocks, but bigger players actually are strategically positioned to take advantage and to become the supplier that the retailers lean on at times of uncertainty,” said UBS analyst Arpine Kocharyan. “The competitive environment is such that very few competitors can match how Mattel can navigate this disruption. Very few players can do what Mattel can do.”

United States International Trade Commission data, compiled from the official U.S. merchandise trade statistics of the U.S. Department of Commerce, shows that more than 70% of all U.S. toy imports came from China in 2024.

Mattel, on the other hand, has been diversifying its supply chain and aimed to source less than 40% of its products from China by the end of the year, Kreiz told CNBC in May. He also noted that no country will supply more than 25% of Mattel’s sourcing in two years.

“With tariffs, it’s just unprofitable for some of the smaller players to make those toys, whereas Mattel and Hasbro can cut those unprofitable skews out and shift the manufacturing to another lower tariff rate country, or no tariff rate country, and still be able to supply the retailers with the toys they need for the holidays,” noted Cox. “I think we’re set up for a better holiday than we would’ve expected in April, given the tariff situation.”

“I would argue that [Mattel] being one of the largest players, with a lot of flexibility in the supply chain, actually allows them to lean less on pricing than others in the industry which competitively positions them and their products during holiday season and into 2026,” Kocharyan added.

Kreiz said that the company expects a “good holiday season and strong topline growth in Q4.”

According to a Seeking Alpha Ltd. report, Mattel expects sales to increase by 1% to 3% for the entire fiscal year compared to 2024, which translates to a range between $5.43 billion to $5.54 billion. It also aims for $1.54 to $1.66 per share for adjusted earnings.

The new year is just around the corner, and “2026 should be a bit more of a rebound year,” Cox said. “The entertainment slate is a lot better, you have a lot more movies, popular intellectual property that’s coming out that should help the toy business return to growth.”