Hasbro takes 3Q earnings hit, blames Toys R Us

Toys R Us’s long fall NEWARK, N.J. — continues to wreak havoc in the toy industry, with toymakers like Hasbro taking hits as they struggle to find new partners to sell their products. Hasbro’s third-quarter earnings came in lower than expected Monday ahead of the 2018 holiday season.

Hasbro’s sales suffered at home and overseas, with a 7 percent drop in revenue in the United States and Canada, and a whopping 24 percent drop internationally. In total, net revenue were down 12 percent from last year at $1.57 billion. Analysts had predicted net revenue of $1.71 billion, according to Refinitiv, a Thomson & Reuters company that estimates financial risk for investors.

Executives attributed the company’s “disruptive year” to the downfall of Toys R Us, which was the biggest toy retailer in the United States and sold a great deal of Hasbro products until it filed for bankruptcy and completed the liquidation process. The summer saw the last remaining stores close their doors. While the void left by Toys R Us represents a huge opportunity for companies like Target, Walmart and Amazon, it’s had a crippling effect on toymakers like Hasbro that are struggling to build relationships with new retailers and move excess inventory.

“The segment’s quarterly performance was negatively impacted by the loss of Toys R Us revenue and not meeting all shipping demands late in the quarter across an expanded retail footprint,” the company said in a news release.

On a conference call with investors, Chief Executive Brian Goldner said Hasbro is restructuring its supply chain operations to fill shipments for new retailers, many of which are smaller than the company was used to.

Toys R Us also owed Hasbro roughly $59 million last September, and the company’s bad debt expenses also bit into Hasbro’s performance this year.