Hasbro Undershoots Q1 Expectations, Citing COVID-19 And EOne Deal Impact

Hasbro shares dipped in pre-market trading after the toy and entertainment company reported first-quarter results slightly below Wall Street expectations.

Earnings swung to a loss of 51 cents a share from 21 cents in the year-ago quarter. Excluding one-time charges, notably costs related to the $4 billion acquisition of mega-indie eOne, earnings came to 57 cents a share. That was a penny below Wall Street analysts’ consensus expectation, per Refinitiv. Revenue of $1.11 billion undershot the estimate of $1.14 billion.

Shares fell 6% in the pre-market, to $77.86.

Hasbro, like many firms, withdrew its financial guidance for the duration of 2020, citing the uncertainties related to COVID-19. But the company sought to reassure investors it is in a solid financial position. It ended the first quarter with $1.2 billion in cash and has a $1.5 billion revolving credit facility available and won’t face a debt maturity until $300 million is due in May 2021.

The entertainment side of the business faced the same push-pull as other companies have, with viewing time skyrocketing but many projects having to be pushed into 2021 and beyond due to the virus. The integration of eOne, which includes leveraging its IP, has been delayed by the pandemic, the company said, though it did not provide an exact timeline.

CEO Brian Goldner said retail sales were “strong” during the first quarter and is up in April. As global economies gradually reopen, the company is dealing with an unprecedented logistics challenge. About 55% of its manufacturing is in China, which is where the outbreak began in January.

The company said stay-at-home orders and school closures have brought some benefits to its brands like Play-Doh.

“Hasbro brands are resonating as people spend more time at home, including games for families to play together,” the company said in its earnings press release, “as kids engage in more creative play.”

Gaming as a segment, which includes Monopoly and Magic: The Gathering, increased 40%, with retail climbing 25%.