Why Hasbro Is Shifting the Blame in Q1

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Hasbro Inc. (NASDAQ: HAS) reported its first-quarter financial results before the markets opened on Monday. The toymaker said that it had $0.10 in earnings per share (EPS) on $716.3 million in revenue, compared with consensus estimates that called for $0.34 in EPS on revenue of $819.4 million. The same period of last year reportedly had EPS of $0.54 and $849.66 million in revenue.

The company noted that the primary reason for the decrease in revenues and earnings is the result of the liquidation of Toys “R” Us in the United States and the United Kingdom, along with uncertainty in its other operations, as well as retail inventory overhang, primarily in Europe.

In terms of its segments, the firm reported as follows:

  • U.S. and Canada segment net revenues decreased 19% to $364.3 million, compared to $451.6 million in 2017.
  • International segment net revenues were $287.9 million, compared to $345.3 million.
  • Entertainment and Licensing segment net revenues increased 21% to $64.0 million, compared to $52.7 million.

The company did not offer any guidance for the coming quarter. However, the consensus estimates from Thomson Reuters are $0.50 in EPS on $954.26 million in revenue for the second quarter.

On the books, Hasbro’s cash and cash equivalents totaled $1.60 billion at the end of the quarter, up from $1.46 billion in the same period of last year.

Brian Goldner, Hasbro’s board chair and chief executive, commented:

Hasbro brands are resonating with consumers and consumer takeaway is positive. However, as we discussed earlier in the year, our first quarter was expected to be difficult. We are working to put the near-term disruption from Toys“R”Us behind us. Our global retailers view this as an opportunity in a key consumer category and are partnering with Hasbro to develop growth plans for our brands. New Hasbro initiatives shipping in this quarter and beyond won’t be caught up in the Toys“R”Us liquidation process. With the rapid shift to a converged retail environment, we accelerated plans we originally had spread throughout the year to transform our commercial organization on a more immediate basis.

Shares of Hasbro closed Friday at $82.81, with a consensus analyst price target of $102.71 and a 52-week range of $82.45 to $116.20. Following the announcement, the stock was down over 8% at $76.02 in early trading indications Monday.