The closure of Toys R Us stores across the U.S. hurt Hasbro Inc. (NASDAQ: HAS) more than expected in the fourth quarter of its fiscal year. In a statement, Hasbro CEO Brian Goldner said that “the effect of its liquidated inventory in the market was more impactful than we and industry experts expected.” Toys R Us was Hasbro’s third largest customer in the U.S. and its second largest customer in Asia and Europe prior to the retailer’s bankruptcy filing in March of last year.
The closure of Toys R Us caused waves across the toy industry, marking the first Christmas without the retailer in more than six decades. According to estimates, the industry sold 2 percent fewer toys last year than the year before. The loss of shelf space dedicated to toys had a considerable impact on toy manufacturers’ bottom lines.
sInvestors were surprised to see that Hasbro’s fourth-quarter earnings missed estimates by such a wide margin. The company reported net income of $8.8 million, or 7 cents per share, versus a loss of $5.3 million, or 4 cents per share, in the same quarter of the previous year. On an adjusted basis, earnings were $1.33 per share, lower than analysts’ estimates of $1.67 per share.
Revenue for the quarter fell 13 percent for the Rhode Island based-company, making it the fifth consecutive quarter of revenue declines. Hasbro reported sales of $1.39 billion, down from $1.6 billion a year earlier. Analysts had forecast sales of $1.52 billion for the quarter. Sales of franchise brands, Hasbro’s largest division, fell 8 percent, while partner brands’ sales fell 20 percent in the fourth quarter.
Shares of Hasbro fell as much as 10 percent after the news. The toy maker’s shares were up 11 percent year-to-date as of Thursday’s close.