In the wake of Toys “R” Us beginning the process of shuttering its US operations, Hasbro has reported a 16% decline in first quarter net revenue to the tune of US$716.3 million. According to the Rhode Island-based toymaker, the double-digit decrease is attributed to Toys “R” Us liquidations in the US and UK, as well as retail inventory overhang in Europe.
Net loss for the first quarter was US$112.5 million, compared to net earnings of US$68.6 million in Q1 2017, while adjusted net earnings for Q1 2018 were US$12.4 million. (The first quarter was a 13-week period, compared to a 14-week period in Q1 2017.)
Hasbro’s Franchise Brands declined by 19% to US$361.7 million in the first quarter. Growth in the Entertainment and Licensing segment (where revenue increased by 21% to US$64 million) was offset by softness in US, Canada and International segments.
The company’s Partner Brands group, meanwhile, declined by 6% to US$200.6 million, despite strong sales for Marvel and Beyblade products. Hasbro Gaming also saw declines (down 22% to US$105.2 million), despite gains in Dungeons & Dragons and Jenga. The company’s Total Gaming category, including all gaming revenue, fell by 20% to US$203.5 million in Q1 2018. Revenue for the Total Gaming category includes Magic: The Gathering and Monopoly, which are featured in the Franchise Brands segment.
Additionally, Emerging Brands declined by 6% to US$48.8 million. Growth in Stretch Armstrong and Littlest Pet Shop was offset by declines in the US, Canada and International segments.
The losses follow a strong fiscal 2017 for the toymaker, at which time Hasbro saw its net revenue increase by 4% to US$5.21 billion for the year, thanks to growth in its Gaming and Franchise Brands segments (and even as other toycos felt the impact TRU’s bankruptcy filing).
In a statement, Hasbro said it is working with global retailers to develop growth plans for its brands and remains on track to meet its goal of generating US$600 to $700 million in operating cash flow this year. Moving forward, the toymaker said it is accelerating its commercial organization transformation and plans to bring new talent on board this year.
Toys “R” us officially filed a motion seeking Bankruptcy Court approval in its Chapter 11 proceedings to begin the process of winding down all US business in March. At the same time, the retailer also announced it would move forward with UK store closures. TRU entered into insolvency administration in the UK on February 28 and failed to secure a buyer for all or part of its businesses.