Hasbro misses analysts’ estimates for quarterly revenue and profit

Published on: 23rd October 2018

Shares fall as Toys R Us effect lingers on. 

The demise of major retail partner Toys R Us has negatively impacted Hasbro’s sales in the United States and Europe, sending its shares down 9% in early trading.

Investor expectations were high going into the quarter after chief executive officer Brian Goldner and Wall Street analysts indicated that Hasbro may mitigate some of the loss from the toy retailer’s bankruptcy in the second half of the year.

However, Hasbro reported a 7% drop in quarterly sales in the United States and Canada to $924.2m, due to the loss of Toys R Us revenue and an inability to meet shipping demands of other retailers. Hasbro’s international sales fell 24%, while sales in its franchise brands, which include Monopoly and Nerf toys, fell 5%.

Net earnings fell to $263.9m, or $2.06 per share, in the third quarter ended September, from $265.6m, or $2.09 per share, a year earlier.

Excluding certain items, Hasbro earned $1.93 per share, missing the average analyst estimate of $2.23, according to Refinitiv estimates.

The company’s revenue fell 12% to $1.57b, also falling short of expectations of $1.71b. Shares were down 7.2% at $91 before the bell on Monday.

By partnering with movie studios such as Marvel and Disney, as well as picking some of its properties and translating them to successful television shows, movies and online videos, Hasbro is aiming to offset some of the challenges it’s facing in the toy sector. The company also said on Monday it was restructuring its business, which would include job cuts and result in charges of $50m to $60m in the current quarter.

Speaking to CNBC’s Jim Cramer, CEO Brian Goldner commented: “We’re waiting for some resolution to Toys R Us Asia as the two partners work out a new arrangement in China, and then we move forward without Toys R Us. Really, the next quarter is the last quarter where Toys R Us has a meaningful impact.”

In the meantime, Hasbro is “adding so many new retail channels,” with 10,000 new US retailers signed on to sell its products just in the last year.

“These are all kinds of new retailers that are out there,” Brian said, adding that Hasbro will enter the 2018 holiday season “with a lot of new kinds of retailers as we continue to build the business, and they want to capture the share that Toys R Us left behind.”


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