HASBRO’S cost-saving efforts helped the Monopoly owner surpass Wall Street estimates for profit in the third quarter, despite weak consumer spending on toys driving a steeper-than-expected drop in sales.
Toymakers such as Mattel and Hasbro have focused on controlling costs this year to weather a slump in demand for toys. Mattel also beat quarterly profit expectations, but lowered its annual sales forecast heading into the crucial holiday shopping season.
Play-Doh parent Hasbro has been pursuing a business turnaround through cost cuts across its supply chain, the divestiture of its eOne live action assets and focusing on its higher-margin digital gaming business.
The company posted an adjusted margin of 25.7 per cent for the quarter, up from last year’s 22.8 per cent. Its inventory fell 39 per cent.
“Our key initiatives around digital, licensing and reinvigorating our product innovation are bearing fruit,” said CEO Chris Cocks.
Growth in Hasbro’s key brands such as Nerf have lagged this year, with analysts noting uncertainty around its gaming pipeline and its ability to grow as gains from the earlier success of digital games “Baldur’s Gate III” and “Monopoly Go!” fizzle out.
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It expects full-year revenue from the Wizards of the Coast and Digital Gaming segment to come in flat to down 1 per cent, compared with earlier expectations of a fall between 1 per cent and 3 per cent.
Hasbro forecast annual revenue from its consumer products segment to fall between 12 per cent and 14 per cent. Its prior estimate was for a 7 to 11 per cent decline.
Quarterly revenue fell for the ninth straight quarter to US$1.28 billion, compared with estimates for a 13.8 per cent drop to US$1.30 billion, according to data compiled by LSEG.
Shares of the toymaker were 2.5 per cent lower in premarket trading, reversing earlier gains. REUTERS
