Toy maker Hasbro loses $2.6M in 1st quarter on severance costs, revenue declines
Posted Apr 23, 2012 05:44:46 PM.
This article is more than 5 years old.
NEW YORK, N.Y. – Hasbro Inc. posted a first-quarter loss on Monday, weighed down by costs related to staff cuts and weak sales of “My Littlest Pet Shop” miniatures and other girl’s toys.
Results from the maker of Monopoly and Transformers missed Wall Street estimates, and its shares fell over 5 per cent.
The first quarter is typically quiet for toy makers, especially compared with the run-up to the crucial winter holiday shopping season. But first-quarter results do indicate how willing Americans are to spend on non-essential items. So far, two of the biggest toy makers, Hasbro and its rival Mattel, have posted disappointing first-quarter results.
Hasbro’s revenue in the first quarter was hurt by slack demand for its girl’s toys, including Furreal Friends fuzzy animatronic animals. But in a call with analysts, CEO Brian Goldner said first-quarter results were in line with the company’s plan, and it estimates more of its revenue will come during the second half of the year.
That’s when Hasbro’s heavy slate of movie-toy tie-ins are expected to increase demand: “Battleship,” which is based on the popular Hasbro game, opens May 18, “Avengers” opens May 4, “G.I. Joe: Retaliation” opens June 29 and “Spiderman” opens July 3.
“We continue to believe that we are on track to deliver revenues and earnings per share growth … for the year 2012,” Goldner said.
The company based in Pawtucket, R.I., said it lost $2.6 million, or 2 cents per share, for the period ended April 1. A year ago, it reported net income of $17.2 million, or 12 cents per share.
Results were hurt by costs related to staff reductions. In March, Hasbro said it was cutting 170 workers because of the “underperformance” in Hasbro’s U.S. and Canadian divisions, which are under new leadership. That led to $11.1 million in severance costs.
Excluding 6 cents per share in severance costs, earnings were 4 cents per share. Analysts polled by FactSet expected earnings of 8 cents per share.
Revenue dropped 3 per cent to $648.9 million from $672 million a year ago, hurt by unfavourable foreign currency exchange rates. This missed Wall Street’s estimate of $667.6 million.
The preschool category benefited from strong sales of Sesame Street and Playskool Rescue Heroes products, including the Transformers Rescue Bots. Its boys’ category was helped by strong sales of its Marvel and Star Wars brands as well as its new construction toy line, KRE-O.
Revenue slipped 16 per cent for the U.S. and Canada, but rose 14 per cent overseas. Entertainment and licensing revenue increased 19 per cent.
Hasbro’s results follow rival Mattel Inc.’s last week. The maker of Barbie and Hot Wheels reported that its first-quarter profit declined, weighed down by lower sales and costs tied to an acquisition.
Shares of Hasbro fell $1.88, or 5.2 per cent, to close at $34.04 Monday. The stock is up about 7 per cent since the beginning of the year.
___
AP Writer Michelle Chapman in New York contributed to this report.
