Hasbro earns $212.9M in Q3 as tariffs affect sales

HASBRO reported a profit of $212.9 million in the third quarter, missing estimates. / COURTESY HASBRO INC.
HASBRO reported a profit of $212.9 million in the third quarter, missing estimates. / COURTESY HASBRO INC.

PAWTUCKET – Hasbro Inc. reported a profit of $212.9 million in the third quarter, a 19.3% decline year over year, according to a company filing on Tuesday.

Revenue for the quarter totaled $1.6 billion, a 0.3% increase year over year. The company said that tariffs, both enacted and threatened, impacted revenue in the quarter.

The company reported an uptick in royalty costs, product- development spending and advertising spend in the third quarter, compared to the previous third quarter.

Earnings per diluted share for the quarter were $1.67, compared with $2.06 per share one year prior.

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“Hasbro remains on track to deliver profitable revenue growth in 2019, behind innovation in gaming, toys and around Hasbro’s Brand Blueprint. However, as we’ve communicated, the threat and enactment of tariffs reduced revenue in the third quarter and increased expenses to deliver product to retail,” stated Brian Goldner, Hasbro’s chairman and CEO.

Chief Financial Officer Deborah Thomas also spoke of the tense global trade environment as having impact on Hasbro’s bottom line. “Hasbro’s global teams are executing within a dynamic trade environment that is impacting the timing of revenue, driving incremental expenses and putting upward pressure on our underlying tax rate,” she said.

“We anticipate disruption throughout the remainder of 2019 as retailers work to manage costs and inventory and we are working to mitigate the impact on consumers this holiday season,” Thomas added. “Our teams are delivering an innovative slate across demographics and categories, including in digital gaming, that we are supporting with robust marketing programs and investment.”

Segment revenue:

  • Franchise Brands had revenue of $779.7 million, an 8% decline year over year, driven by a decline in Nerf, My Little Pony, Baby Alive and Play Doh sales, offset by a rise in Magic: The Gathering, Monopoly and Transformers sales.
  • Partner brands reported revenue of $427 million, a 40% increase year over year, driven by products related to the Frozen and Star Wars movie releases, as well as products related to Marvel’s Avengers and Spider-Man franchises.
  • Hasbro Gaming reported a 17% decline in revenue year over year to $232.3 million, driven by a decline in Pie Face sales and Speak Out sales, among other games, offset by a rise in revenue from Dungeons & Dragons.
  • Emerging brands reported a 1% increase in revenue year over year to $136.2 million, lead by a rise in shipments of Power Rangers product and Playskool products.

“The team drove continued growth in the Wizards of the Coast gaming brands, Magic: The Gathering and Dungeons & Dragons, and delivered significant new holiday initiatives,” said Goldner. “To start the fourth quarter, we are seeing a strong consumer response to the global launch of Hasbro’s line for Disney’s Frozen 2  and Star Wars: The Rise of Skywalker  as well as the U.S. launch of the new NERF Ultra.”

The company paid $85.9 million in cash dividends in the third quarter and repurchased $1.5 million in common stock.

Hasbro also expressed optimism about its agreement to purchase Entertainment One, or eOne, for roughly $4.3 billion. The company still expects to close the deal in the fourth quarter of 2019. EOne’s stockholders recently resoundingly approved the acquisition.

“We are pleased with the progress toward completing our acquisition of eOne,” said Goldner. “The strategic opportunity to bring onboard the brands, capabilities and talent from eOne is compelling to our long-term prospects as a leading global play and entertainment company and we look forward to sharing more about our plans after the close.”

Hasbro shares fell as much as 15.9% by 9:34 a.m. Tuesday, following the quarterly report. The stock had advanced almost 50% this year through Monday’s close, more than double the gain of the benchmark S&P 500 Index.

Chris Bergenheim is the PBN web editor. You may reach him at Bergenheim@PBN.com. Bloomberg News contributed to this article.

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