Hasbro's (HAS) earnings report disappointed Wall Street, as the company was hurt by a number of factors, including the liquidation of Toys R Us. Meanwhile, rival Mattel (MAT) beat the Street's forecasts in its holiday quarter, saying that its Barbie line ended 2018 with its highest sales in five years.
HASBRO: Hasbro said its fourth quarter adjusted earnings per share came in at $1.33, well below the $1.67 Wall Street was expecting. Quarterly revenue of $1.39B was also below the $1.52B consensus. In a statement, Hasbro Chief Executive Officer Brian Goldner said 2010 was a "very disruptive year, driven by the bankruptcy and liquidation of Toys R Us across most of the world and a rapidly shifting consumer and retail landscape." He added that while Hasbro diversified its retailer base, meaningfully lowered retailer inventories and delivered "innovative" new offerings to its global consumers, "We were not, however, able to recapture as much of the Toys R Us business during the holiday period as we anticipated as the effect of its liquidated inventory in the market was more impactful than we and industry experts expected." "It is an unprecedented yet finite event," he added. On Hasbro's earnings conference call, Goldner added that prior to its bankruptcy filing, Toys R Us was Hasbro's third largest customer in the U.S. and its second largest customer in Europe and Asia.
Separately, Hasbro raised its quarterly dividend 8% to 68c from 63c. The company said that previously reported organizational actions are now expected to deliver $50M-$55M in net pre-tax savings in 2019.
MATTEL: Hasbro rival Mattel reported its own quarterly results on Thursday after the market close. Mattel said EPS was 4c, well above the loss of (16c) analysts were expecting. Revenue for the quarter of $1.52 also beat analysts' estimates of $1.44B. Sales of Barbie jumped 12% during the quarter, reaching a five-year high and marking the fifth consecutive quarter of growth for the brand. Ht Wheels gross sales for the quarter increased 9% as reported, reaching the brand's highest full year gross sales in its history. "Our fourth quarter results demonstrate meaningful progress in executing our strategy and significant improvement over last year," CEO Ynon Kreiz said in a statement. He added that "We remain focused on advancing our strategy to restore profitability and regain top-line growth in the short-to-mid-term and are laying the groundwork to capture the full value of our IP in the mid-to-long-term." Kreiz said the company's key financial metrics, including gross margin, operating income, and EPS, are all moving "in the right direction" and said Mattel's cost savings initiative is ahead of plan entering 2019.
WHAT'S NOTABLE: In late December, Amazon (AMZN), which has been gaining share from other retailers, said that it had a "record-breaking" holiday season with more items ordered worldwide than ever before. Amazon customers shopped at record levels from a wide selection of products across every department, it said. "This season was our best yet, and we look forward to continuing to bring our customers what they want, in ways most convenient for them in 2019. We are thrilled that in the U.S. alone, more than one billion items shipped for free this holiday with Prime," said Jeff Wilke, CEO Worldwide Consumer at Amazon, said at the time. Additionally, Target (TGT), which expanded its toy selection over the holiday season, reported a comparable sales increase of 5.7% for the November/December holiday season, above the 3.4% increase it posted last year. The company's holiday results reflected "strong" traffic, positive store comps and comparable digital sales growth of 29%, Target said.
PRICE ACTION: In morning trading, shares of Hasbro are down nearly 5% to $86.00, while Mattel spiked 22% to $15.10.