Toy Industry: What to Expect from Q4 + Retail Roundup
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UBS retail surveys indicate 2025 holiday season toy sales grew by a low-single-digit percentage year-over-year, driven primarily by price rather than volume. Demand accelerated in October, prompting restocking, but experienced volatility in November before decelerating slightly in December. Online penetration rose to approximately 41%, up from 39% last year. Promotional intensity declined year-over-year, while inventory levels tightened. The Kidults category posted strong double-digit growth, whereas infant and preschool categories remained the weakest. International retail sales slightly outperformed the US, with strength across Canada, Europe, and Asia.
Hasbro maintains clean inventory alongside robust gaming operations. Management may provide conservative mid-single-digit growth guidance for 2026, with UBS estimating roughly 5% growth. UBS raised its target price from $89 to $99, maintaining a Buy rating.
Mattel took on more inventory risk but benefited from increased shelf space, demonstrating market share gains. UBS expects 2026 revenue growth of 4.7% and raised the target price from $29 to $30, maintaining a Buy rating.
Consumer demand remained resilient despite tariff-driven price increases, with a clear preference for higher-value products priced between $30 and $50. Retailers utilized the "first sale rule" to secure tariff refunds without lowering retail prices, thereby expanding their own margins.