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A month has gone by since the last earnings report for Hasbro (HAS). Shares have lost about 3.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hasbro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hasbro’s Q4 Earnings and Revenues Miss Estimates
Hasbro reported dismal fourth-quarter 2018 results, wherein both earnings and revenues missed the Zacks Consensus Estimate for the second successive quarter. Adjusted earnings of $1.33 per share lagged the Zacks Consensus Estimate of $1.68 and also declined 42.2% from the prior-year quarter’s number.
Net revenues totaled $1,389.2 million, which missed the consensus estimate of $1,524 million. The top line also decreased 13% from the prior-year quarter. The downside can be primarily attributed to the liquidation of Toys “R” Us in the United States, Europe and Asia Pacific. International revenues, mostly in Europe, were impacted by change in consumer shopping behaviors. Revenues in the quarter was impacted by $35.1 million due to foreign exchange headwind.
Brand Performances
The Franchise Brand posted revenues of $729.9 million, down 8% year over year. Notably, increase in sales at MONOPOLY and MAGIC: THE GATHERING was overshadowed by a dismal performance at other Franchise Brands including NERF, MY LITTLE PONY and TRANSFORMERS. However, Franchise Brand revenues improved at the Entertainment and Licensing segment.
Partner Brands’ revenues slumped 20% to $272.9 million due to a decline at all other Partner Brands, except MARVEL and BEYBLADE. Apart from the United States and Canada segment, Partner Brand revenues declined at the International segment.
The Hasbro Gaming revenues came in at $267.4 million, which decreased 22% on a year-over-year basis. Robust performances by DUNGEONS and DRAGONS, JENGA, CONNECT 4 and DON’T STEP IN IT were overshadowed by the weakness at PIE FACE and other properties. Hasbro Gaming revenues declined in all three major operating segments of the company. Notably, Hasbro’s total gaming category declined 4% to $1.44 billion in 2018.
Meanwhile, Emerging Brands’ revenues increased 5% year over year to $119 million.
Segmental Revenues
Regionally, net revenues at the United States and Canada segment decreased 9% to $685.6 million. The segmental performance was primarily impacted by the Toys “R” Us liquidation and higher mix of close out activity. However, operating profit margin contracted 450 basis points (bps) year over year to 15%.