(Reuters) - Toymaker Hasbro Inc (HAS.O) fell 23 cents a share short of Wall Street expectations for profit in the first quarter as the fallout of the Toys ‘R’ Us bankruptcy drove a nearly $100 million shortfall in revenue.
Shares of the company fell nearly 8 percent to $76.01 before the bell and were set to open at their lowest since December 2016 after the company blamed the liquidation of its biggest retail customer and unsold inventory for the drop in revenue.
Hasbro had warned in February that much of the Toys ‘R’ Us impact would be felt in the first two quarters of the year and peer Mattel (MAT.O) added to the sense of crisis in the sector by appointing its fourth chief executive in three years last week.
The toy industry’s traditional players have been undone in recent years by a shift toward thousands of rival, smaller producers selling on Amazon and other e-commerce sites as well as kids picking electronic games over physical toys.
Mattel, which reports on the first quarter on Thursday, also saw its shares drop another 5 percent after the Hasbro results.
“We are working to put the near-term disruption from Toys’R’ Us behind us,” Hasbro Chief Executive Officer Brian Goldner said.
“Our global retailers view this as an opportunity in a key consumer category and are partnering with Hasbro to develop growth plans for our brands.”
Net revenue in Europe, a region where Hasbro struggled to clear excess inventory and suffered due to the liquidation of the UK Toys ‘R’ Us operation, fell 28 percent.
Excluding certain items, Hasbro earned 10 cents per share, compared to analysts’ estimate of 33 cents per share, according to Thomson Reuters I/B/E/S, its first miss in at least two years.
The net loss attributable to the company was $112.5 million, or 90 cents per share, in the first quarter ended April 1, compared with a profit of $68.6 million, or 54 cents per share, a year earlier.
The company’s revenue fell 16 percent to $716.3 million, missing analyst’s estimate of $814 million.
Reporting by Aishwarya Venugopal and Nivedita Balu in Bengaluru; Editing by Anil D'Silva and Patrick Graham
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