Monday, June 24, 2024
32 C
Brunei Town

Potential industry slowdown in toy sales weighs on shares of Hasbro and Mattel

AP – 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.

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 USD1.5 billion from USD1.68 billion. Analysts polled by Zacks Investment Research were looking for higher revenue of USD1.64 billion.

The Pawtucket, Rhode Island-based company now foresees full-year revenue falling 13 per cent to 15 per cent, 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 three per cent to six per cent, which was an adjustment from a previous forecast for revenue to be down low-single digits.

Shares slid more than 12 per cent before the market open on Thursday.

Hasbro posted a third-quarter loss USD171.1 million, or USD1.23 per share.

Stripping out one-time costs and amortisation costs, earnings were USD1.64 per share. This met Wall Street’s view.

Rival Mattel Inc had a better third quarter, reporting on Wednesday that its sales rose nine per cent 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 per cent in pre-market trading.

A woman stand infront of a wall of Barbie dolls in the Mattel display at the 2010 Toy Fair in New York. PHOTO: AFP