Shares of toy maker Hasbro plummeted more than 10 percent before the opening bell Friday after the company said it was more negatively impacted by the liquidation and closure of Toys R Us than it had forecast.
“2018 was a very disruptive year, driven by the bankruptcy and liquidation of Toys R Us across most of the world and a rapidly shifting consumer and retail landscape,” Brian Goldner, Hasbro’s chief executive officer, said in a statement Friday. “During 2018, we diversified our retailer base, meaningfully lowered retailer inventories, and delivered innovative new offerings to our global consumers.
“We were not, however, able to recapture as much of the Toys R Us business during the holiday period as we anticipated as the effect of its liquidated inventory in the market was more impactful than we and industry experts expected,” he said. “It is an unprecedented yet finite event.”
Hasbro said that earned $1.33 per share on $1.39 billion in revenue during the fourth quarter, compared to the $1.67 per share on $1.52 billion analysts had expected according to Refinitiv.
Hasbro and rival toy maker Mattel had to scramble to find new retail locations for their products in the wake of Toys R Us’ bankruptcy.
While a number of retailers, including Target, Walmart, and even drugstores, expanded their toy sections this past holiday season, there were still far fewer shelves showcasing toys in 2018 than in years prior. The loss of shelf space appeared to disproportionately affect items like plush toys, building sets, and sports toys.
Sales in the toy industry fell 2 percent last year as toy manufacturers endured their first Christmas without Toys R Us in more than 60 years. In the U.S., customers spent $21.6 billion on toys in 2018, less than the $22 billion shelled out for action figures, dolls, and games in 2017, according to market researcher NPD Group.
Hasbro’s portfolio took a big hit in the quarter. Sales of franchise brands, like Nerf, Monopoly, and My Little Pony, fell 8 percent and partner brands which include “Star Wars,” “Frozen,” and “Marvel” merchandise, slumped 20 percent in the fourth quarter.
Notably, Disney did not release a “Star Wars” film during the fourth quarter this year and therefore sales of “Star Wars” merchandise had a difficult comparison to last year’s release of “Star Wars: The Last Jedi.”
The company’s gaming category, which includes Magic: The Gathering and Monopoly, also took a hit, tanking 22 percent.
The only bright spot was Hasbro’s emerging brands, toys like Lost Kitties and Yellies, which were up 5 percent during the period.