Game maker Hasbro
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Shares of Hasbro And Mattel fell Thursday as both toy makers suggested fourth-quarter sales would slow.
Shares of Hasbro fell more than 10% and Mattel fell more than 7% on Thursday.
The companies are facing challenges as they enter the crucial fourth quarter, they said as they separately reported third-quarter earnings. Consumers are cutting back on spending as inflation puts pressure on their budgets as the holidays approach. Toys and games, products that both Hasbro and Mattel are known for, could be on the chopping block this season as consumers watch their spending.
Hasbro, which houses iconic brands such as Play-Doh and Monopoly, lowered its full-year forecasts. It forecast a 13% to 15% drop in sales for the year, a worse decline than its previous forecast of a 3% to 6% drop in sales. A “softer toy outlook” was driving expectations, the company said in its earnings release Thursday.
“We have a cautious view on the holidays,” CEO Chris Cocks said during Hasbro’s earnings call Thursday. “We don’t have a really solid picture of where the market is going to go.”
Mattel’s implicit fourth-quarter guidance on toy sales offered Wednesday also spooked Wall Street despite strong third-quarter results.
The company’s third-quarter earnings results “were largely offset by a weaker-than-expected implied guidance” for the fourth quarter, which suggested lackluster performance for Mattel’s business outside of Barbie products, Citi Research analysts said Thursday.
While Mattel exceeded Wall Street expectations in terms of both revenue and revenue, Hasbro’s third-quarter report fell short of analyst estimates compiled by LSEG, formerly known as Refinitiv. The company’s adjusted earnings per share of $1.64 fell short of expectations of $1.70 per share, and revenue of $1.5 billion fell short of the $1.64 billion estimate.
Hasbro’s revenue fell 10% this quarter compared to the same period last year, largely due to declines in its consumer and entertainment segments. Conversely, Mattel posted a 9% increase in sales on Wednesday, largely driven by a rise in Barbie sales combined with the blockbuster summer movie.
Sales in Hasbro’s consumer segment, which includes popular toy brands such as Nerf, My Little Pony and Transformers, fell 18%. The company said the decline was due to “abandoned licenses and softer category trends.”
Sales from Hasbro’s entertainment segment also lagged behind. It fell as much as 42% year over year, largely due to the writers’ and actors’ strikes, the company said. Hasbro said earlier this year it will sell its film and TV company eOne, home of Peppa Pig, to Lionsgate for $500 million.