Hasbro’s Q1 Revenues Down Amid Toys”R”Us Liquidation

Hasbro’s net revenues decreased 16 percent to $716.3 million in the first quarter due to the liquidation of Toys”R”Us in the U.S. and U.K. and uncertainty in its other operations, as well as retail inventory overhang, primarily in Europe.

Reported net loss for Q1 was $112.5 million, compared to net earnings of $68.6 million in 2017. In the U.S. and Canada, net revenues dropped by 19 percent to $364.3 million. International net revenues were down 17 percent to $287.9 million, while net revenues for the entertainment and licensing segment rose 21 percent to $64 million.

Franchise brands net revenues decreased by 19 percent to $361.7 million, partner brands declined 6 percent to $200.6 million, Hasbro Gaming dropped 22 percent to $105.2 million and the emerging brands segment was down 6 percent to $48.8 million.

“The Hasbro teams executed extremely well during a challenging first quarter,” said Brian Goldner, Hasbro’s chairman and CEO. “Hasbro brands are resonating with consumers and consumer takeaway is positive. However, as we discussed earlier in the year, our first quarter was expected to be difficult. We are working to put the near-term disruption from Toys’R’Us behind us. Our global retailers view this as an opportunity in a key consumer category and are partnering with Hasbro to develop growth plans for our brands. New Hasbro initiatives shipping in this quarter and beyond won’t be caught up in the Toys’R’Us liquidation process. With the rapid shift to a converged retail environment, we accelerated plans we originally had spread throughout the year to transform our commercial organization on a more immediate basis.”

“Our underlying financial strength is sound, and despite the near-term challenges associated with a major customer liquidation, Hasbro is positioned to manage a challenging 2018 and drive growth in 2019 and beyond,” added Deborah Thomas, Hasbro’s chief financial officer. “The quarter’s revenue and profits were negatively impacted by lower revenues and higher expenses associated with events that do not reflect the health of our underlying business. We remain on track to meet our goal of generating $600 to $700 million in operating cash flow this year while investing to build our brands, transform our organization and return cash to shareholders.”