Hasbro (NASDAQ:HAS) reported third-quarter earnings Tuesday morning that fell short of analysts’ expectations as inflation weighed on consumers and the company contended with high levels of inventory.
The toy maker also faced tough comparisons from a year ago when it benefitted from multiple film releases such as “My Little Pony: A New Generation″ and “Come From Away.” Surging inflation added to the pressure.
“As expected, the third quarter is our most difficult comparison and was further impacted by increasing price sensitivity for the average consumer,” CEO Chris Cocks said in an earnings release.
He expanded on this point in a conference call Tuesday morning, saying that promotions “have become increasingly important” in driving product sales. The company reported high inventory, which is currently afflicting retailers across the board. Hasbro said in an investor presentation that its inventory should help it meet holiday demand.
Earnings per share proved to be $1.42 vs. the expected $1.52. Revenue proved to be $1.68 billion, right on target.
Revenue for the period fell 15% compared to last year, dragged down by a 35% decrease in entertainment revenue. Its Wizards of the Coast unit, which includes “Dungeons & Dragons” and “Magic: The Gathering,” saw revenues decline 16%.
For the fourth quarter, the company expects flat results versus last year, buoyed by the “Magic: The Gathering” brand. The digital and trading card game has grown into the company’s first $1 billion brand and the 30th anniversary of the game occurs in the fourth quarter.
HAS shares 34 cents to $68.05.
