Hasbro, trying to find footing, posts weak 3Q
Hasbro, wrestling with the demise of Toys R Us and elusive shoppers spending a lot more on high-tech gadgets, fell well short of third-quarter expectations Monday.
The Pawtucket, Rhode Island, toy maker will absorb charges of as much as $60 million next quarter as it cuts jobs.
Mattel, Hasbro’s rival, said in July that it would cut more than 2,200 jobs. Both toy makers have acknowledged they’ve been hurt this year by the shuttering of Toys R Us stores, the largest independent toy seller in the world.
It is the first full quarter that the company has been without Toys R Us as a customer.
“We continue to believe this is a near-term retail disruption that will last for the next few quarters,” Chairman and CEO Brian Goldner said during a conference call.
Sales of games and toys at at brick-and-mortar stores fell in the quarter, but Goldner said that online point-of-sale climbed by the high-single digits at the same time.
The lost Toys R Us revenue hurt Hasbro most notably in the U.S., Europe, Australia and Asia, with Goldner adding that
the company has recaptured about one third of the U.S. and Canada Toys R Us revenues heading into the holiday.
“We are successfully managing retail inventory and it is down significantly in the U.S. and in Europe, where we are aggressively working to clear excess inventory by year end,” Goldner said.
In the most recent quarter, revenue dropped 12 per cent partly because of lost sales of its products at Toys R Us stores in the U.S., Europe and the Asia Pacific region.
Hasbro Inc.’s third-quarter
earnings slipped to $263.9 million, or $2.06 per share. Adjusted for pretax gains, pershare earnings were $1.93, far below Wall Street projections for per-share earnings of $2.24, according to a survey by Zacks Investment Research.
Revenue of $1.57 billion also missed analyst expectations for $1.71 billion. Hasbro experienced a 24 per cent drop in international revenue, with Europe falling 29 per cent, Latin America slipping 16 per cent and the Asia Pacific region declining 14 per cent.
Tablets and smartphones
have become the most desired toys in many households, and that is taking a toll on the sale of more traditional playthings.
Sales fell for Nerf, My Little Pony and Transformers products in the quarter, but Hasbro did put up some very strong numbers in the same period last year thanks to new My Little Pony and Transformers movies.
Hasbro’s stock tumbled nearly 7 per cent in early morning trading on Monday. Shares of Mattel Inc., which posts earnings Thursday, fell 4 per cent.