Brian Goldner, chairman and CEO of Hasbro, has revealed that the recent Toys “R” Us bankruptcy filing in the U.S. and Canada had “negative impact” on Hasbro’s quarterly revenues and operating profit. This was according to its latest financial report.
“However, our multi-platform content strategy, combined with an industry leading investment in innovation and an omni-channel commercial approach, is driving strong consumer takeaway heading into the holiday season as consumers engage with Hasbro brands across a multitude of experiences,” Goldner added.
Deborah Thomas, Hasbro’s chief financial officer, added that the company is currently “well-positioned for the holiday”, including good quality inventory at Hasbro and at retail, backed by strong consumer momentum.
“We continue to work closely with Toys”R”Us as we head into the holiday period. Given our new view to the holiday based on Toys”R”Us and the economic outlook in certain markets, our updated expectation is fourth quarter revenues will increase in a range of 4% to 7% versus the fourth quarter 2016,” Thomas added.
According to the report, international segment net revenues increased 7% to US$739.2 million compared to US$690.7 million in 2016. Regionally, Asia Pacific saw a revenue increase of 17%, Europe increased 3% and Latin America increased 13%. Meanwhile, emerging markets revenues increased 8% in the quarter. Meanwhile, international segment operating profit decreased US$1.1 million to US$132.0 million. This was 17.9% of net revenues, compared to US$133.1 million, or 19.3% of net revenues, in 2016.
The worst hit regions by the Toys “R” Us bankruptcy were the U.S. and Canada segment. This saw a third quarter 2017 net revenues increase of 7% to US$993.8 million compared to US$932.8 million in 2016. The segment was negatively impacted by the Toys”R”Us bankruptcy in the U.S. and Canada, the report said.
In combination with a shift in product mix, this contributed to the 5% decline in the U.S. and Canada segment quarterly operating profit to $217.3 million, or 21.9% of net revenues, compared to US$228.0 million, or 24.4% of net revenues, in 2016.
Hasbro’s entertainment and licensing segment saw a growth of 4% to US$58.4 million in net revenue, compared to US$56.1 million in 2016, behind higher consumer products and entertainment revenues. Operating profit for this segment increased 20%, to US$16.9 million, or 28.9% of net revenues, compared to US$14.1 million, or 25.1% of net revenues, in 2016.
Franchise brand revenues increased 7% to US$827.3 million for the third quarter. This was driven by revenue growth in brands such as Nerf, Transformers, My Little Pony and Monopoly. Partner brand revenues decreased 2% to US$485.7 million, seeing increases for U.S. and Canada segment and declining in the international segment.
Hasbro gaming revenues grew 22% to US$280.1 million driven by Hasbro’s diverse gaming portfolio, including face-to-face and digital gaming. Meanwhile, emerging brands revenue increased 9% to US$198.3 million.
News of Toys “R” Us’ potential bankruptcy first emerged in September this year. This followed media reports that the company was “evaluating a range of alternatives” to deal with its 2018 debt maturities. Weeks later, the company filed for chapter 11 bankruptcy protection for a certain of its U.S. and Canadian subsidiary. Meanwhile in Asia, the company is currently exploring options for its US$2 billion worth Asia business with its local joint venture partner, the Fung brothers, Bloomberg reported.
(Image courtesy: Hasbro Singapore Facebook)