(Reuters) -Mattel ( MAT ) missed third-quarter sales and profit estimates on Tuesday, hurt by sluggish retail demand for its toys in North America amid rising economic uncertainty.

Consumers struggling with the rising cost-of-living crisis have been pulling back on high-priced and non-essential items, which has led to retailers cautiously holding off on inventory commitments until closer to the time and point of sale. This, in turn, has been raising challenges for Mattel's ( MAT ) business in the United States.

"We did see a shift of retail ordering patterns in the U.S. where retailers moved from domestic import to direct shipping in order to have more time to make the decision closer to the holiday season," CEO Ynon Kreiz told Reuters.

Quarterly sales in its North America segment, the biggest revenue-contributing region for the company, fell about 11.7%, compared to a decline of 3.4% a year ago.

At a time when broader retail industry grapples with persistent sales decline, U.S. President Donald Trump's recent threat to impose 100% tariffs on Chinese imports has fanned fresh concerns among experts who caution a further escalation in prices and pressure on demand.

This comes as retailers and toy makers gear up for the critical holiday season.

Mattel ( MAT ), which expects China to make up less than 40% of its production by 2025, is diversifying its supply chain and optimizing products to mitigate tariff costs.

The company's quarterly net sales of $1.74 billion missed the analysts' average estimate of $1.83 billion, as per data compiled by LSEG.

Its third-quarter adjusted profit of 89 cents per share also came in largely below estimates of $1.07 apiece.

Mattel's ( MAT ) quarterly adjusted gross margin declined to 50.2% from 53.1% a year ago due to impacts from inflation as well as tariff costs.

The company maintained its annual outlook and expects a strong fourth quarter as retailers restock ahead of holiday demand.

Earlier on Tuesday, Netflix announced a licensing deal with Mattel ( MAT ) and Hasbro to launch themed merchandise globally starting in 2026 across categories like dolls, action figures and collectibles.