Hasbro Blames Toys ‘R’ Us For Huge Losses
Hasbro has revealed details on its first quarter results, which have shown how Toys “R” Us has hit the company hard, toy sales are down and how Disney products have helped.
Hasbro did reveal that their Partner Brand revenues (which include Disney) declined 6% to $200.6 million. Revenue growth in MARVEL and BEYBLADE was more than offset by declines in other Partner Brands, which include Frozen and Star Wars. Partner Brand revenues increased slightly in the U.S. and Canada segment, but declined in the International segment.
The liquidation of Toys “R” Us in the US and Europe really hit them hard, as net revenues for the first quarter 2018 decreased 16% to $716.3 million versus $849.7 million in 2017.
“The Hasbro teams executed extremely well during a challenging first quarter,” said Brian Goldner, Hasbro’s chairman and chief executive officer. “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.”
“Our underlying financial strength is sound, and despite the near-term challenges associated with a major customer liquidation, Hasbro is positioned to manage a challenging 2018 and drive growth in 2019 and beyond,” said Deborah Thomas, Hasbro’s chief financial officer. “The quarter’s revenue and profits were negatively impacted by lower revenues and higher expenses associated with events that do not reflect the health of our underlying business. We remain on track to meet our goal of generating $600 to $700 million in operating cash flow this year while investing to build our brands, transform our organization and return cash to shareholders.”
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My Take: It’s pretty clear to see that the closure of Toys “R” Us has had a major impact on Hasbro, which has made a mess across all parts of the company. While Disney toy sales are down, its not a huge surprise since popularity of both Frozen and Star Wars toys have been dropping. But its going to take a long time for Hasbro to get back on track following the loss of Toys “R” Us.