Hasbro and Mattel adjust their forecasts before the holiday season.

• Toy sales are dropping during the third quarter, causing Mattel and Hasbro to decrease guidance for the end of the year.
• Before the holiday season, retail companies like Mattel and Hasbro may experience softened results due to lowered guidance.
• Despite mixed opinions on holiday toy spending, the overall spending is predicted to rise from $979.5 billion to $989 billion during the season, as stated by the National Retail Federation.

Toy sales are declining during the third quarter, so their end-of-year guidance was decreased ahead of the key holiday season.

Wall Street expectations for earnings per share were exceeded by both toy giants, despite revenue falling short of consensus estimates compiled by LSEG.

The updated year-end guidance for 2024 reflects the mixed results for both companies' third quarters.

Mattel anticipates sales for the last three months of the year to be "slightly down" from its prior guidance update, while Hasbro lowered its revenue guidance and now expects revenue to decline between 12% and 14% for consumer products, down from a previous guidance of a loss of between 7% and 11%.

Before the crucial holiday season, retail companies like Mattel and Hasbro may experience softer outcomes, which could have significant impacts on their sales.

On Thursday, Mattel's shares rose by over 4%, while Hasbro experienced a decline of more than 6%.

In 2023, Hasbro laid off 1,100 employees in December due to weak sales that persisted into the holiday season, while Mattel's "Barbie" movie helped them weather the storm.

The toy market is expected to experience a decline in sales during the holiday season, aside from building block sets, according to Hasbro.

"According to CEO Chris Cocks, during Hasbro's earnings call on Thursday, the toy industry is currently experiencing a decline in the range of low single digits to mid-single digits. He predicts that the holiday season will likely continue this trend, with a potential decline of lower single digits."

Cocks stated that the profit from building blocks, commonly marketed to toddlers, may have the potential to level out the entire toy market.

The company's earnings report stated that Mattel expects the holiday season to drive growth in the fourth quarter, with "market share gains and a toyetic theatrical slate."

Despite mixed opinions on holiday toy spending, the overall spending is predicted to rise from $979.5 billion to $989 billion during the season, as stated by the National Retail Federation.

The upcoming presidential election in November may impact spending as the economy remains a top priority among voters, while climate disasters such as the hurricanes in Florida may divert people's attention from their spending towards the end of the year.