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Earnings Preview: another dismal sales time for toymaker Hasbro in Q4

Toymaker Hasbro, Inc. (HAS) is expected to report its fourth-quarter 2018 earnings on Feb. 8, before the opening bell.

It was only a quarter ago that Hasbro missed estimates sending the stock down. This time, the Street expects earnings much lower at $1.68 a share on revenue of $1.52 billion.

Hasbro (HAS) announces Q4 2018 Earnings

This drop in estimates is on the assumption that the entire sector of traditional toymakers has been suffering from sliding consumer demand and a corresponding sales crunch.

Optimistically, fourth-quarter earnings are usually marginally better due to the inclusion of holiday sales, but the latest trend that retailers have reported could push Hasbro and other toymakers down further.

The liquidation of retailers such as Toys ‘R’ Us did not help either.

 

Hasbro Earnings
Hasbro is the maker of the famous toy line TRANSFORMERS (CREDIT: Hasbro)

The maker of famous brands such as NERF and TRANSFORMERS and board games such as Monopoly, Hasbro has always been an industry giant. But the company is forced to diversify into tech-based products to tackle the latest taste of youngsters.

New offerings of video games, MP3 players, tablets, smartphones and other electronic devices have put pressure on both top-line and bottom-line by driving costs higher, and it might take a few more quarters for Hasbro to recover.

LOOKING BACK

In the previously reported third quarter, cost of sales for the toymaker shot up 100 basis points to 41.8% of net revenue, while operating margin slipped 10 basis points year-on-year.

Hasbro third quarter 2018 Earnings Infographic
Hasbro Q3 2018 Earnings Infographic

Revenues then declined 12% on loss of sales from Toys ‘R’ Us the US, Europe and Asia-Pacific. Net income also dropped 1.4%, despite a favorable tax benefit from the US tax reform.

With changing retail landscapes, it is imperative for old-timers such as Hasbro to look to new avenues. Investors this time would be on the lookout of such ventures when the toy giant reports results on Friday.

 

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