Toys R Us, hammered by shifting consumer trends, is shuttering the 700 stores it has left, depriving Hasbro, Barbie maker Mattel and other toy companies of prime display space nationwide.
Hasbro posted declining sales in all business areas, after the world's largest toy chain announced the liquidation of its operations in the U.S. and U.K. Hasbro's shares initially declined, only to rebound after Chief Executive Officer Brian Goldner told investors the impact would lessen going forward as retailers, such as Walmart and Target, likely expand their toy offerings.
The toy maker said the drop was a result of the Toys "R" Us liquidation, as well as "uncertainty" in some operations and excess inventory in Europe.
Shares of Hasbro went up by approximately 3% on Monday, but have reached a low of $79.00. Hasbro had warned in February that residual effects from the bankruptcy of Toys R Us would weigh heavily on the brand for the first two quarters of 2018. In North America, sales sank 19%.
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Partner Brand revenue also dropped 6%, overall, but was offset by revenue growth in Marvel and Beyblade products. The liquidation also generated expenses of $61.4m.
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, which runs through March, is Hasbro's smallest by revenue. Year-to-date, HAS has declined -5.17%, versus a 0.23% rise in the benchmark S&P 500 index during the same period. This is usually when toymakers are rebuilding inventory for the rest of the year. Hasbro reported a 16% decline in net revenue to $716.3 million for the first quarter, but company executives said the impact of the collapse of one of its largest retail customers would fall off in the second half of the year. Analysts had estimated $821.2m on average.