Shares of Hasbro Inc. (HAS) dropped by 0.7% in premarket trading on Thursday, following the toy maker’s disappointing fourth-quarter results. The company reported a net loss of $128.9 million, or 93 cents per share, compared to net income of $82.2 million, or 59 cents per share, in the same quarter of the previous year. Excluding nonrecurring items, such as charges related to implementing its Blueprint 2.0 strategy, adjusted earnings per share rose to $1.31, missing the FactSet consensus of $1.33.
Revenue for the quarter also fell short of expectations, dropping 16.6% to $1.68 billion. This was below the FactSet consensus of $1.72 billion. Consumer products revenue decreased by 25.9% to $1.00 billion, while entertainment revenue slumped 11.8% to $334.8 million. On the other hand, Wizards of the Coast and digital gaming revenue experienced a 22.0% increase to $339.0 million.
Commenting on the results, Chief Financial Officer Deborah Thomas said, “We forecasted a challenging 2022, and that came to fruition.” For the full year 2023, the company expects adjusted earnings per share to be between $4.45 and $4.55, lower than the FactSet consensus of $4.88. Revenue is expected to decline in the “low-single digits” percentage range, compared to the FactSet revenue consensus of $5.96, which implies a 1.8% year-over-year increase.
Despite the weak fourth-quarter performance, Hasbro’s stock has gained 4.3% over the past three months through Wednesday. This is in contrast to the S&P 500 (SPX) which has increased by 4.8% over the same period.
Hasbro’s fourth-quarter results have highlighted the challenges that the company has been facing in the current environment, with the pandemic continuing to affect consumer spending. The company’s full-year outlook for 2023 also suggests that it is not expecting a significant improvement in the near future.
The company has been attempting to address these issues through its Blueprint 2.0 strategy, which is focused on fewer, bigger brands. This strategy has included the launch of new products, such as the Monopoly Live game and the Nerf Ultra One blaster, as well as the acquisition of eOne, which owns the Peppa Pig and PJ Masks brands. The company has also been increasing its focus on digital gaming, with the launch of Magic: The Gathering Arena and Dungeons & Dragons.
These initiatives have been helping to offset some of the weakness in the consumer products and entertainment segments, but it remains to be seen whether they will be enough to help the company turn around its fortunes in the current environment. In the meantime, investors will be keeping a close eye on the company’s results to see if it can continue to make progress towards achieving its goals.
