US toy and hobby retail sales will grow steadily through 2030, but the real momentum is online. Ecommerce growth will outpace the retail market as its role in the category continues to expand.

Hasbro and Mattel enter the 2025 holiday season on divergent paths after contrasting Q3 results. Hasbro outperformed expectations and raised its outlook, fueled by strong growth in its Wizards of the Coast and digital gaming divisions, while Mattel missed estimates and kept guidance steady amid cautious retailer orders and tariff pressures. Despite broader industry growth, slowing consumer demand and higher costs pose headwinds. With Hasbro’s diversified mix offering resilience if toy sales weaken, Mattel’s reliance on traditional toys could make it more vulnerable to price-sensitive shoppers this holiday season.

Lego continues to outperform the toy industry by delivering products that appeal to both children and adults while expanding brand awareness in Asia. While we expect US toy and hobby sales to grow just 2.0% this year, Lego is increasingly in a league of its own. The company’s all-ages appeal, IP partnerships, and brick-and-mortar strategy are working in tandem to drive sales and encourage lasting loyalty.

As tariffs raise costs for brands and retailers, many are embracing SKU rationalization—cutting underperforming items to rein in expenses and protect margins.Retailers face a delicate balancing act: trimming costs without alienating customers. SKU rationalization may be a short-term necessity, but its long-term impact hinges on how well brands can preserve shopper loyalty while streamlining the aisle.

Hasbro and Mattel are diversifying their supply chains: While that should help mitigate the effects of US tariffs, the US economic policy could still dampen demand for toys.

Hasbro and Mattel’s cost cuts pay off: Despite sluggish demand, both companies beat analysts’ bottom-line expectations.

Toys and hobby sales have normalized after a pandemic-era spike, though some brands are still flying high. Here’s what to expect from the industry this year.

We expect retail sales growth to slow to 2.9% this year: That pullback in spending is leading retailers to cut staff to protect their bottom lines.

Hasbro and Mattel are optimistic about the future: The resiliency of the toy category coupled with strong IP properties should keep both companies in the green, even in the event of a recession.