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Hasbro (HAS) reports Q3 earnings

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A employee arranges boxes of Hasbro board games on a shelf at a Goal Corp. location in Emeryville, California.

David Paul Morris | Bloomberg | Getty Images

Hasbro reported third-quarter earnings Tuesday morning that fell in need of analysts’ expectations as inflation weighed on consumers and the corporate contended with high levels of inventory.

The toy maker also faced tough comparisons from a 12 months ago when it benefitted from multiple film releases similar to “My Little Pony: A Latest Generation” and “Come From Away.” Surging inflation added to the pressure.

“As expected, the third quarter is our most difficult comparison and was further impacted by increasing price sensitivity for the common consumer,” CEO Chris Cocks said in an earnings release.

He expanded on this point in a conference call Tuesday morning, saying that promotions “have change into increasingly vital” in driving product sales. The corporate reported high inventory, which is currently afflicting retailers across the board. Hasbro said in an investor presentation that its inventory should help it meet holiday demand.

Shares were down greater than 2% Tuesday morning, hitting a latest 52-week low.

Here’s how the toy maker performed compared with Wall Street estimates, in accordance with Refinitiv:

  • Earnings per share: $1.42 vs. $1.52 expected.
  • Revenue: $1.68 billion vs. $1.68 billion expected.

Revenue for the period fell 15% in comparison with last 12 months, dragged down by a 35% decrease in entertainment revenue. Its Wizards of the Coast unit, which incorporates “Dungeons & Dragons” and “Magic: The Gathering,” saw revenues decline 16%.

As prices for goods and supplies surge, the toy and game giant has increased prices for products like Nerf Blasters and My Little Pony figures.

For the fourth quarter, the corporate expects flat results versus last 12 months, buoyed by the “Magic: The Gathering” brand. The digital and trading card game has grown into the corporate’s first $1 billion brand and the thirtieth anniversary of the sport occurs within the fourth quarter.

The corporate also pointed to several upcoming releases, including Marvel’s “Black Panther: Wakanda Perpetually” and the corporate’s own “Transformers: EarthSpark,” which the corporate will produce merchandise for through the fourth quarter and beyond.

With the vacations approaching, the toymaker said it plans to “sell through inventory” within the fourth quarter because it seeks to persist with its plan of specializing in fewer, greater brands and more licensing.

Cocks told “Closing Bell” in early October that the toy market stays resilient even through bad times.

Read the earnings release here.

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