Hasbro’s results were in contrast to those of rival Mattel Inc, which on Thursday reported a surprise profit on strong sales of its revamped line of Barbie dolls.
Mattel’s shares rose 20%, while those of Hasbro were down 5% by late morning.
While every major US toy maker scrambled to find new avenues to sell toys after the sudden liquidation of the world’s largest toy retailer, Hasbro’s reliance on toys based on movie franchises compounded its struggles.
“Hasbro is very reliant on entertainment for success and their Disney licenses – Frozen, Star Wars and Marvel. In non-movie, non-entertainment years, those brands are not going to sell as well,” said Jackie Breyer, editorial director at trade magazine the Toy Book.
The lack of Disney princess movies last year, for which Hasbro holds key licenses, also drove more pre-teens to Barbie dolls in the holiday season, allowing Mattel to take market share away from Hasbro in the dolls category.
Barbie added about US$134 million to Mattel’s sales in 2018 in the absence of direct competition from Hasbro’s Disney Princess dolls, Jefferies analyst Stephanie Wissink said.
Hasbro’s sales in Europe also took a hit from the bankruptcies of several specialty toy retailers and reduced spending in the United Kingdom ahead of Britain’s impending exit from the European Union.
Lower inventory levels at European retailers was nearly as impactful as Toys ‘R’ Us’ liquidation to Hasbro’s overall business, Chief Financial officer Deborah Thomas said, adding that the toy and games market in Europe was also shrinking.
Betting on Disney
Hasbro said it expects to return to revenue and profit growth in 2019, banking on a slew of new big budget Disney movie releases including “Captain Marvel”, “Avengers: End Game” and “Star Wars: Episode IX.”
A sequel to “Frozen” is also expected around Thanksgiving, which Hasbro says will boost sales through 2020, which Breyer says could crimp Barbie sales during the holidays.
The company’s net revenue fell to US$1.39 billion in the fourth quarter ended Dec 30, while analysts were expecting US$1.52 billion, according to IBES data from Refinitiv.
Excluding certain items, the company earned US$1.33 per share, below the average analyst estimate of US$1.67 per share.