Overcoming the effects of losing one of its largest customers when Toys ‘R’ Us declared bankruptcy last year, toymaker Hasbro Inc. (HAS, Financial) reported better-than-expected second-quarter earnings before the opening bell on Monday, sending shares higher.
The Pawtucket, Rhode Island-based company, whose portfolio of brands includes My Little Pony, Nerf, Monopoly and Play-Doh, posted net earnings of $6.03 million, or 48 cents per share. While this was down from 53 cents last year, it still beat Thomson Reuters’ estimates of 29 cents per share.
Revenue fell 7% from the prior-year quarter to $904.5 million, but still beat expectations of $833.1 million.
In addition to losing a major customer, the company noted that international revenues declined 11% as a result of managing excess retail inventory, especially in Europe.
In a statement, Chief Financial Officer Deborah Thomas said Hasbro’s “global teams executed well despite the disruption” and emphasized its financial position is strong.
“Our diverse portfolio enabled us to partially offset the negative margin impact from lower revenues, but not entirely,” she said. “We are working with our retailers to successfully execute their plans for Hasbro’s innovative portfolio this holiday season.”
Chairman and CEO Brian Goldner is also looking toward the future, noting that Hasbro is investing in its business to drive growth in 2019 and beyond.
“We are focused on moving beyond the near-term disruption of losing a major customer, with a clear path forward including new retailer activations to meet the consumer demand made available by the Toys ’R’ Us departure,” he said.
As part of the effort to move forward, in early June, the company closed its $522 million acquisition of Saban Properties’ Power Rangers brand. The deal was announced in February.
Following the announcement, shares of Hasbro climbed 13% to $106.14 in morning trading. Over the past year, the stock has traded as low as $79 and as high as $116.20. GuruFocus estimates the stock has gained 14% year to date.
On Monday, shares of fellow toymaker Mattel Inc. (MAT, Financial) were up 4.41% at $16.68. The Barbie manufacturer is scheduled to report its second-quarter earnings after the market closes on July 25.
Disclosure: No positions.
