The company is having difficulty moving its excess inventory.
Ongoing inflation concerns are affecting nearly every sector of the global economy. Surprisingly, this even includes toys and games, in spite of the rapidly-approaching holiday shopping season. Hasbro, one of the largest producers of toys in the western economy, reported their third-quarter earnings this week, which fell short of expectations.
In the report, Hasbro announced that they had only earned $1.42 per share against the $1.52 expected by Wall Street analysts. Revenue remained flat at $1.68 billion compared to expectations, though it was still down by 15% compared to this time last year. Inflation is the primary culprit here, with consumers feeling less eager to spend money on nonessential purchases. Not only has this hurt Hasbro’s bottom line, but it’s left them with an excess of inventory that they’ve had difficulty moving.
“As expected, the third quarter is our most difficult comparison and was further impacted by increasing price sensitivity for the average consumer,” Chris Cocks, Hasbro chief executive officer, said in the report picked up by BusinessWire. “To achieve our full-year outlook, we are projecting Hasbro’s fourth quarter revenue to be approximately flat versus last year on a constant currency basis with particular strength from our Wizards and Digital Gaming segment. Growth will be driven by what we expect to be one of the biggest fourth quarters for Magic: The Gathering as we kick off the brand’s 30th anniversary and celebrate Hasbro’s first ever $1 billion brand.”
While things are iffy right now, Hasbro has high hopes for the holiday season leading into 2023. “Hasbro is well positioned for growth in 2023 and beyond as we execute our new strategic plan focused on bigger brands, stronger profits and consumer-focused leadership,” said Cocks. “We are committed to an industry-leading dividend and a 3-year program to drive $250-300 million per year in cost savings, including $50 million in annualized run-rate for year-end 2022. We have a strong line up of new products in Q4 and into next year, 7 new blockbuster films and 20+ streaming and TV shows that we are merchandising against starting with November’s Marvel Studios’ Black Panther: Wakanda Forever and our Transformers: EarthSpark.”