Introduction
Hasbro, the well-known toymaker, is set to report its fourth-quarter results before the market opens on Tuesday. Here are the key details you need to know about Hasbro’s performance.
Net Income
According to a consensus of three analysts polled by FactSet, Hasbro is expected to report a profit of $60 million in the fourth quarter. In comparison, the company reported a loss of $128.9 million in the same quarter of the previous year.
Revenue
Based on a poll of 10 analysts by FactSet, Hasbro’s revenue is expected to decline by 20% to $1.358 billion. The company had already projected a 13% to 15% decrease in toy sales for the full year.
Adjusted Earnings
After excluding one-time items and charges, Hasbro is expected to post an adjusted profit of 66 cents, according to a consensus of 12 analysts polled by FactSet.
Share Performance
Hasbro shares experienced a decline of about 21% during the last quarter and closed at $50.59 on Friday.
What to Watch For
Impact of Headwinds on Hasbro and the Industry
In December, Hasbro warned that the headwinds it faced in 2023 had persisted through the holiday period and were expected to continue into 2024. Rival company Mattel also forecasted flat sales in constant currency for 2024, citing a lighter release schedule for films and consumer pullback impacting the industry. Analysts will be eagerly looking to Hasbro for insights into how long it expects these headwinds to last, providing an indication of the overall health of the toy industry.
Potential Margin Improvements
In conjunction with its headwinds warning, Hasbro announced plans to reduce its workforce by approximately 1,100 jobs, representing nearly 20% of its total employees. While sales may have struggled, these layoffs have raised hopes among some analysts that the company’s margins could improve in the coming year due to reduced costs. Analysts will closely examine the company’s margins in the fourth quarter and pay attention to any forecasts provided for the upcoming year.
Inventory Restocking Strategy
Following a challenging 2023 holiday season characterized by bloated inventories, Hasbro expressed its intent to end 2023 with cleaner stock levels. This would allow the company to replenish its inventory with newer toys in the current year. As such, Hasbro’s update on the extent to which it has benefited from this inventory restocking strategy will be of particular interest.