Hasbro Inc (HAS.O) failed to reach quarterly profit estimates on Tuesday as the company’s move to jack up prices to offset rising commodity costs caused inflation-weary customers to purchase fewer games and toys.
While toys have normally fare better compared to other discretionary categories during economic downturns, Hasbro warned earlier in October that demand was beginning to fall ahead of the holiday season due to persistently high inflation and slashed its annual sales forecast.
Hasbro said on October 18 it waits to see more promotional activity approaching the gifting season as consumers get more intentional about spending their holiday budgets carefully at a time of decades-high inflation.
“Promotions and entertainment field demand have become increasingly important and will be key in the quarters ahead,” Chief Executive Officer Christian Cocks said on a post-earnings call, adding that Amazon’s recent Prime Day saw Hasbro’s sales volume increase in mid-double digits compared to a year ago.
Buy Bitcoin NowThe company projects fourth-quarter revenue growth to be flat on constant currency basis, driven by key brands such as Marvel’s Black Panther, My Little Pony, and Peppa pig. Analysts were projecting a near 2% drop.
“There are still indications of fairly strong demand for toys,” Linda Bolton Weiser, analyst at D.A. Davidson, said.
Still, Hasbro saw its net revenue drop 15% to $1.68 billion in the third quarter ended Sept. 25, partly weighed down by a stronger dollar. The Transformers toys maker posted a 28% drop in adjusted net earnings to $196.2 million, or $1.42 per share, while analysts had projected the company to gain $1.52 per share, according to Refinitiv IBES.
Shares of the ‘Magic: The Gathering’ maker tumbled about 2% in morning trading.
