Shares of toymaker Hasbro Inc. (HAS, Financial) fell 9% in premarket trading on Monday after the company reported disappointing third-quarter results, which were dented by the loss of Toys ‘R’ Us after closing its doors last summer.
The Pawtucket, Rhode Island-based company, which is known for brands like Play-Doh, Monopoly, Nerf and My Little Pony, posted adjusted earnings of $1.93 per share, missing Refinitiv’s estimates of $2.23. Revenue declined 12% from the prior-year quarter to $1.57 billion, falling short of the $1.71 billion analysts were expecting.
The demise of retailer Toys ‘R’ Us significantly impacted the company’s sales in the U.S. and Canada, which saw a 7% decline to $924.2 million. Failure to meet shipping demands of other retailers also hurt sales.
International sales saw an even steeper decline of 24% due to a shift in consumer shopping trends. By region, Europe recorded a 29% drop in revenue, Latin America posted a 16% decrease and Asia sales dipped 18%.
While revenue from its entertainment and licensing segment increased 45%, Hasbro recorded a 5% decline in sales of its franchise brands and a 37% decrease in partner brand sales.
In a statement, Chairman and CEO Brian Goldner commented on the company’s performance in “a very disruptive year.”
“The lost Toys ’R’ Us revenues are impacting many markets around the world, notably the U.S., Europe, Australia and Asia,” he said. “The volume of product liquidated in the second quarter had a near-term impact on the third quarter sell through and shipments. 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.”
Heading into the holiday season, Goldner added that the company is prepared to meet demand from retailers who are hoping to fill the gap left by the fallen retail giant.
Further, in an effort to get back on track, Hasbro also announced it is restructuring its business, which will result in job cuts and $50 million to $60 million in charges for the current quarter.
With a market cap of $11.82 billion, Hasbro shares were trading around $93.19 on Monday morning. GuruFocus estimates the stock has gained 3% year to date.
Shares of rival toymaker Mattel Inc. (MAT, Financial), which reports earnings later this week, were down approximately 1.56% at $14 on Monday morning.
Disclosure: No positions.
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