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Hasbro’s earnings slipped after a disappointing third quarter (Q3) earnings report. The toymaker’s profits have fallen 9% after a lower -than -expected earnings report. The news caused a slide in Hasbro stock, with a decrease of about 4%. The company has $1.57 billion in revenue, less than the projected $1.7 billion the corporation hoped to earn.
Trouble with Toys ‘R’ Us
Hasbro’s latest financial woes are largely caused by the bankruptcy of its retail partner Toys ‘R’ Us. The toy chain went under because of a crippling debt load after being bought out by Bain Capital. In addition to debt, Toys ‘R’ Us couldn’t compete with Amazon and other large online retailers that sold the company's toys. As a result, Hasbro saw a 7% drop in sales over the last quarter in the US. Overseas, the news was worse, with a 24% decline in international profits. The company previously did well turning its toys into movies, such as the Transformers movies. However, the lack of a Transformers movie in Q3 meant a lack of tie-in toy sales to boost profits.
Hasbro plans to turn company around
Hasbro plans to turn around its earnings slide by trimming its workforce. The toymaker will cut 5% of its workforce by the end of the year, about 270 jobs. While the Q3 news is grim, chief executive officer Brian Goldner sounded optimistic in a conference call with investors.
‘We are successfully managing retail inventory and it is down significantly in the U.S. and in Europe, where we are aggressively working to clear excess inventory by year end. A growing array of retailers are now ramping new programs to take share this holiday season and we are well positioned to meet their demand,’ said Goldner.
Brick-and-mortar sales at retailers have declined, but online sales of Hasbro toys have increased. The company expects an upswing in sales in the fourth quarter when the Transformers spinoff movie Bumblebee premieres later this year. Hasbro also anticipates a bump in sales during the holiday season.