Mattel gets 40% of its toys from China and says it will raise prices ‘where necessary’ to offset Trump tariff costs

The El Segundo, California-based company said the increases are necessary even though it is speeding up its plans to diversify its manufacturing base away from China. Trump imposed a 145% tariff on most Chinese-made products.

Company executives told analysts on a conference call that China currently accounts for 40% of Mattel’s global production. The company plans to move roughly 500 products this year from manufacturers in China to sources in other countries, compared to 280 products last year.

For some highly sought after toys, Mattel said it would enlist factories in more than one country. To prevent possible shortages, the company said it was focusing on getting products to stores without interruptions.

The company said that even with price increases it expects 40% to 50% of its toys will cost customers $20 or less.

“The diversified and flexible supply chain in global commercial organizations are clear advantages to Mattel in this period of uncertainty,” CEO and Chairman Ynon Kreiz told analysts.

Citing the ongoing uncertainty surrounding the president’s trade policies, however, Mattel withdrew its annual earnings forecast on Monday. The company said it would be “difficult to predict” consumer spending and the company’s U.S. sales for the remainder of the year without more information.

Mattel reported larger-than expected first-quarter sales but also a wider loss. Mattel said sales rose 2% to $827 million for the quarter that ended March 31.

The company’s loss expanded to $40.3 million, or 12 cents per share, in the quarter. That compares with a loss of $28.3 million, or 8 cents per share, in the year-ago period.

Analysts expected a loss of 10 cents on sales of $786.1 million for the first quarter, according to FactSet.

Mattel’s shares were down less than 1% in after markets trading.