Mattel says it plans to raise toy prices and move production to counter the tariffs on Chinese products implemented by President Donald Trump.
The new 10% tariffs on China went into effect this week.
Mattel says about 40% of its toys are currently made in China. It hopes to reduce that to no more than 25% by moving production to other locations.
Analysts aren't sure if Mattel will be able to pass along cost increases to consumers.
"We are also skeptical of the ability to pass through price increases in a category ... where demand remains weak," Morgan Stanley analyst Megan Clapp said to Reuters.
The toymaker's stock was up 15% on Wednesday after it reported stronger than expected earnings and raised guidance for this year.
Net income surged to $542 million in 2024, up $327 million the previous year.
Net sales dropped by 1% to $5.38 billion, according to Mattel's earnings report.
The company cited strength for its Hot Wheels toy cars, action figures, building sets and games.
It say a decline in products for infants, toddlers, preschoolers and Barbie dolls.
Mattel says it plans to invest in digital gaming and repurchase $600 million shares.
