Hasbro Shares Hit After Hollywood-Related Toy Sales Disappoint In Q2 Report
Star Wars: The Last Jedi will have to come to Hasbro’s rescue, at least when it comes to the toy maker’s ability to meet Wall Street’s earnings expectations.
Company shares are down about 8% in early trading after it reported Q2 sales that — while in line with analyst forecasts — seemed light for “partner brands” which includes Hollywood-related products.
Partner Brands merchandise revenues increased 1% to $230.0 million, and are down 9% to $443.0 million for the first half of 2017. Entertainment and Licensing revenues fell 1% to $51.5 million in Q2.
Execs say that the numbers reflect the timing of releases: This year has more potential hits planned for the second half vs the release schedule in 2016. In addition, Hasbro discounted products to clear the shelves ahead of the release of new Star Wars merchandise at Disney’s Force Friday 2 rollout on September 1, plus the October release of My Little Pony: The Movie, and November’s Olaf’s Frozen Adventure from the Frozen franchise.
Olaf will come with “a global line up of fashion and small dolls that are true to the story,” CEO Brian Goldner says.
With Star Wars, he says that “we’re very excited about our range of innovation” and “we have an expansive line for the film along with a well-received 40th anniversary line and the all-new “Star Wars Forces of Destiny” celebrating the inspiring stories of iconic heroes from across the Star Wars universe.”
“This is clearly lining up to be a very good Star Wars movie year…and strong toy sales for us,” he adds.
Meanwhile, Marvel’s Guardians of the Galaxy Vol 2 and Spider-Man Homecoming “are delivering strong performances.”
Sales for Transformers: The Last Knight and the Disney Princess properties also were “strong,” he says. Indeed, Transformers as a brand “is performing at a higher level than it was in 2014” with the last movie release helped by strong TV and Netflix viewing.
To prepare for the 2H potential blockbusters, including Star Wars, “we really took advantage of cleaning [existing] inventory up now” with close-out sales, CFO Deb Thomas says. “On a full year basis we do not think it will be unusual compared to a normal year. It’s really just a timing shift.”
Hasbro reported Q2 net income of $67.7 million, up nearly 30% vs the period last year, on revenues of $972.5 million, up 10.6%. The top line was a hair above the $972.4 million that analysts expected. Earnings at 53 cents a share were well ahead of the 46 cents the Street anticipated.
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