PAWTUCKET, R.I. (AP) — Hasbro, wrestling with the demise of Toys R Us and elusive shoppers spending a lot more on high-tech gadgets, fell well short of third-quarter expectations Monday.
The Pawtucket, Rhode Island, toy maker will absorb charges of as much as $60 million next quarter as it cuts jobs.
Mattel, Hasbro's rival, said in July that it would cut more than 2,200 jobs. Both toy makers have acknowledged they've been hurt this year by the shuttering of Toys R Us stores, the largest independent toy seller in the world.
"The lost Toys "R'' Us revenues are impacting many markets around the world, notably the U.S., Europe, Australia and Asia," said Chairman and CEO Brian Goldner. "The volume of product liquidated in the second quarter had a near-term impact on the third quarter sell through and shipments. We are successfully managing retail inventory and it is down significantly in the U.S. and in Europe, where we are aggressively working to clear excess inventory by year end."
In the most recent quarter, revenue dropped 12 percent partly because of lost sales of its products at Toys R Us stores in the U.S., Europe and the Asia Pacific region.
Hasbro Inc.'s third-quarter earnings slipped to $263.9 million, or $2.06 per share. Adjusted for pretax gains, per-share earnings were $1.93, far below Wall Street projections for per-share earnings of $2.24, according to a survey by Zacks Investment Research.
Revenue of $1.57 billion also missed analyst expectations for $1.71 billion. Hasbro experienced a 24 percent drop in international revenue, with Europe falling 29 percent, Latin America slipping 16 percent and the Asia Pacific region declining 14 percent.
Tablets and smartphones have become the most desired toys in many households, and that is taking a toll on the sale of more traditional playthings.
Sales fell for Nerf, My Little Pony and Transformers products in the quarter, but Hasbro did put up some very strong numbers in the same period last year thanks to new My Little Pony and Transformers movies.
Shares tumbled 6 percent before the opening bell Monday. Shares of Mattel Inc., which posts earnings Thursday, fell almost 4 percent.