Hasbro ( NASDAQ: HAS ) maintained its full-year earnings forecasts despite coming up short of expectations in its Q3 report.
The Pawtucket, Rhode Island-based toy manufacturer posted a 28% drop in adjusted EPS to $1.42 alongside a 14.7% decline in revenue from the prior year to $1.68B. Analysts had expected $1.60 and $1.69B, respectively. Foreign exchange impacts and greater supply chain challenges were noted as particular adverse impacts on the quarterly performance.
"As expected, the third quarter is our most difficult comparison and was further impacted by increasing price sensitivity for the average consumer," CEO Chris Cocks explained. "To achieve our full-year outlook, we are projecting Hasbro’s fourth quarter revenue to be approximately flat versus last year on a constant currency basis with particular strength from our Wizards and Digital Gaming segment. Growth will be driven by what we expect to be one of the biggest fourth quarters for MAGIC: THE GATHERING as we kick off the brand’s 30th anniversary and celebrate Hasbro’s first ever $1B brand."
The company expects a 50-basis point expansion of adjusted operating margin to 16% for the full year based upon projected improvement in fourth quarter performance. Cocks added that the company should continue to recover into 2023 as the company pursues its Blueprint 2.0 strategic plan .
“We are committed to an industry-leading dividend and a 3-year program to drive $250-300M per year in cost savings, including $50M in annualized run-rate for year-end 2022,” Cocks commented. “We have a strong line up of new products in Q4 and into next year, 7 new blockbuster films and 20+ streaming and TV shows that we are merchandising against starting with November’s Marvel Studios' Black Panther: Wakanda Forever and our Transformers: EarthSpark.”
Elsewhere, the company highlighted its debt reduction efforts, reducing long-term debt from about $3.98B at the close of September 2021 to $3.73B at the end of Q3 2022. Management highlighted the debt reduction as a key factor allowing for the repurchase of 1.4M shares of Hasbro common stock for about $125M thus far in 2022. $242.6M remains in the board’s repurchase authorization.
Shares of Hasbro ( HAS ) fell 2.35% in premarket trading on Tuesday.
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Hasbro maintains full-year guidance despite earnings miss