For toymaker Hasbro, drop in shares is no game
PAWTUCKET, R.I. — Shares of Hasbro plunged Tuesday after the company revealed the trade war is wreaking havoc on its supply chain and creating confusion among customers for its toys.
The company said to offset rising costs, price increases may be on the way for consumers.
Hasbro CEO Brian Goldner said the company has seen multiple dates for the rollout of “List 4” tariffs, which include toys, models and puzzles.
Those tariffs, which had been postponed in August over fears that it would affect the holiday shopping season, now are slated to roll out Dec. 15.
Hasbro is the latest example of how companies continue to struggle with President Donald Trump’s tariffs — even after some were delayed.
Hasbro says the shifting dates led to canceled orders in the third quarter and the company was unable to meet demand as it adjusted operations to accommodate businesses that buy its toys and games.
“Since the administration began discussing tariffs, we have outlined the ripple effect they would have on our business,” Goldner said. “We’ve spoken about the changing order patterns in the U.S., whether or not tariffs are ultimately enacted. In the third quarter, the threat of and implementation of tariffs in certain instances impacted our shipments and our ability to fully meet demand.”
Other tariffs, including a 25 percent tariff on $200 billion worth of goods, already have been enacted in September and disrupted game sales for Hasbro. Nerf sales also are being affected, Goldner said.
The company said that if the next round of tariffs goes into effect in December, customers will feel it.
“We would take pricing to again protect our gross margin and those price increases would be passed along to consumers,” Goldner said.
Jay Foreman, CEO of Basic Fun, said he’s experiencing something similar to Hasbro.
He said that typically at this time of the year, retailers would take ownership of January and spring goods in November in China and they would pay suppliers like him. The retailers then would ship the goods to the U.S. as needed.
But Foreman says that now, retailers don’t want to risk sending goods to the U.S. that could come after the Dec. 15 deadline, so they’re putting the burden on suppliers. Basic Fun is scrambling to produce and ship its toys by the deadline and retailers will just pay the supplier as they need the toys.
“We are going to have to stretch every penny of cash flow,” Foreman said, adding that he likely will have to delay holiday bonuses to workers. He’s also worries that retailers will cancel later orders.
Hasbro already has reduced the number of products it gets from China, which had hovered above 80 percent as recently as 2012. Goldner said the company is trying to bring that down to less than 50 percent by the end of next year.
The toy maker posted thirdquarter net income of $212.9 million, or $1.67 per share. Even removing one-time costs, which brought per-share earnings to $1.84, the company fell 62 cents short of projections, according to a survey of industry analysts by Zacks Investment Research.
Its revenue of $1.58 billion is also below the $1.73 billion industry analysts had expected.
Shares of Hasbro Inc., based in Pawtucket, Rhode Island, tumbled 15 percent.