Hasbro Reports Lower-Than-Forecast Earnings, Revenue After Toys `R’ Us Bankruptcy

10:48 AM, Feb 8, 2019 — Hasbro (HAS) on Friday reported fourth-quarter adjusted earnings and revenue that missed forecasts as the Toys `R’ Us bankruptcy and subsequent liquidation hurt the toy manufacturer.

The company said earnings came in at $1.33 a share, down from $2.30 during the same period the previous year and behind consensus compiled by Capital IQ for $1.68 a share. Revenue was reported at $1.39 billion, down from $1.6 billion the prior year and short of estimates for $1.53 billion. Shares fell 4.2% in early trading.

“The lower revenues reflect lost Toys `R’ Us revenues throughout 2018 in the US, Europe and Asia Pacific, as well as a more meaningful impact than expected from the liquidation of Toys `R’ Us inventory into these markets,” Hasbro said in its earnings statement.

Revenue also declined internationally, notably in Europe, as the company addressed changing shopping habits, an evolving retail landscape and reduced retail inventory amid “challenging” economics, Hasbro said. Revenue in the UK last year took a $43 million hit from foreign exchange.

Full-year earnings were reported at $1.74 a share, down from $3.12 a share in 2017. Excluding after-tax charges, earnings came in at $3.85 a share. The company said after-tax charges that were excluded include a $0.76 impact from non-cash impairment charges related to Backflip Studios goodwill, a $0.61-per-share hit from severance costs due to “organizational actions,” a $0.42 impact from bad debt expense from Toys ‘R’ Us and a $0.32 hit from US tax reform.

Chief Executive Brian Goldner said 2018 was a “very disruptive year” due to the bankruptcy and liquidation of Toys ‘R’ Us across the world and mid a shifting consumer and retail landscape.

“During 2018, we diversified our retailer base, meaningfully lowered retailer inventories and delivered innovative new offerings to our global consumers,” he said. “We were not, however, able to recapture as much of the Toys `R’ Us business during the holiday period as we anticipated as the effect of its liquidated inventory in the market was more impactful than we and industry experts expected. It is an unprecedented yet finite event. In addition, as we discussed throughout the year, our European shipments declined as the teams successfully lowered retailer inventories amidst a declining toy and game market.”

Companies: Hasbro, Inc.
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