By Deborah Mary Sophia
(Reuters) -Hasbro Inc forecast annual sales and profit below Wall Street estimates on Thursday, slammed by a sharp decline in demand for its toys and games from customers reeling with rising prices.
Both Hasbro and its rival Mattel Inc had seen a steep drop in consumer spending in the crucial holiday season, putting to test the resilience of toymakers to economic slowdown as customers spend more on essentials.
Demand has also come under pressure from price hikes in the last three years as toymakers battle a pandemic-induced surge in costs of everything from freight to synthetic resin, while retailers cut back orders to keep inventories tight.Â
Hasbro is facing a “challenging consumer discretionary environment”, Chief Executive Chris Cocks said, adding that a stronger dollar and its exit from some licenses, brands and markets will result in a $300-million hit to annual revenue.
It lost the highly-lucrative license to make Disney Princess toys to Mattel last year.
Revenue at Hasbro’s consumer products business – its largest and home to toys such as Nerf blasters and My Little Pony figures – is expected to decline mid-single digits.
The overall revenue is projected to be down low-single digits, while Wall Street analysts were expecting a 2.5% increase to $6 billion.
“It’s a cautious outlook…(but) what I’m most concerned about is that Hasbro doesn’t lose sight of the consumer products segment,” said James Zahn, Editor-in-Chief of trade magazine “The Toy Book”.
“Consumer products is what Hasbro is rooted in as a business.”
Hasbro expects 2023 adjusted per-share earnings in the range of $4.45 to $4.55 compared with estimates of $4.88 per share.
Still, some analysts said the forecasts were in line with expectations following the toymaker’s preliminary results late in January, sending Hasbro shares up 1% in premarket trading.
(Reporting by Deborah Sophia in Bengaluru; Editing by Arun Koyyur)
