THE FORCE FLOPS
Weak Star Wars toy sales, Toys “R” Us woes hit Hasbro hard in the fourth quarter,
NEW YORK— Toymaker Hasbro Inc. delivered a surprise sales drop for the critical fourth quarter as it struggled with lagging sales of Star Wars toys and the woes of Toys “R” Us.
The results, announced Wednesday, underscore the challenges toymakers face as they wrestle with a shift in buying habits. Parents are increasingly spending more of their money for toys online at sites such as Amazon. And kids are more interested in mobile devices than traditional toys.
The bankruptcy last fall of Toys “R” Us is also putting pressure on toymakers. Toys “R” Us announced that it was closing 182 locations after struggling through the holiday season. The toy retailer operates about 900 stores in the U.S., including Babies “R” Us stores. Toys “R” Us still sells about 20 per cent of the toys bought in the U.S., according to Stephanie Wissink, an analyst at Jefferies LLC.
The report follows results last week from Mattel Inc., which saw a surprise loss and disappointing sales in the fourth quarter.
Hasbro reported a loss of $5.3 million (U.S.), or 4 cents per share, in the quarter that ended in December, down from a profit of $192.7 million, or $1.52 per share, in the year-earlier period.
The results adjusted to exclude pre-tax expenses and the impact of tax reform came to $2.30 per share, surpassing Wall Street expectations.
The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $1.82 per share.
The Pawtucket, R.I.-based toymaker posted quarterly revenue of $1.6 billion, down from $1.63 billion and short of Wall Street forecasts for $1.73 billion.
Hasbro said higher sales of brands such as Beyblade, Marvel and Sesame Street were more than offset by a decline in Star Wars and to a lesser extent declines in Yo-Kai Watch and Disney Frozen products. For the year, Hasbro earned $396.6 million, or $3.12 per share, on revenue of $5.21 billion. That marks the first time since 1993 that Hasbro’s annual sales surpassed Mattel’s, which were $4.88 billion in 2017.