Hasbro's third-quarter revenue performance missed Wall Street's expectations and the company cut its full-year revenue outlook again as signs of a possible industry slowdown in toy sales heading into the holiday season weighs on jittery investors.
Holiday shopping is traditionally a critical selling season for toy companies and can comprise a large portion of their annual toy sales. But this year there are concerns that a pullback in consumer spending due to inflation concerns may lead some to spend less on dolls, board games and other toys this season.
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Consumer confidence dropped in September, as Americans continue to worry that interest rates will remain elevated for an extended period of time.
For the quarter, Hasbro's revenue slipped to $1.5 billion from $1.68 billion. Analysts polled by Zacks Investment Research were looking for higher revenue of $1.64 billion.
The Pawtucket, Rhode Island-based company now foresees full-year revenue falling 13% to 15%, driven by a softer toy outlook for its consumer products division, which includes toys, games, clothing, music and other categories. Its prior guidance was for a decline of 3% to 6%, which was an adjustment from a previous forecast for revenue to be down low-single digits.
Shares slid more than 12% before the market open on Thursday.
Hasbro posted a third-quarter loss $171.1 million, or $1.23 per share.
Stripping out one-time costs and amortization costs, earnings were $1.64 per share. This met Wall Street's view.
Rival Mattel Inc. had a better third quarter, reporting on Wednesday that its sales rose 9% in the period. The company also boosted its full-year adjusted profit outlook on the continued benefit of the success of the “ Barbie ” movie.
Still, experts are pointing to toy industry sales being down for the year to date and the third quarter as a concern. Mattel Chairman and CEO Ynon Kreiz said during a conference call on Wednesday that the company anticipates the global toy industry will experience a mid single-digits decline in toy sales for the full year.
Mattel's stock dropped more than 12% in premarket trading.