Hasbro raises profit forecast after cost-cutting push
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Toymaker Hasbro posted a smaller-than-expected drop in sales during the latest quarter as it beat profit expectations through cost control measures and a steady demand for digital gaming.
Shares in the company, which manufacturers toys such as Nerf, GI Joe and My Little Pony, increased by 7% during early trading on Thursday.
The company’s turnaround strategy to limit expenses and maintain a tight inventory amid an industrywide slowdown in toy demand has helped its margins grow in the period April to June to 21.3%, compared with a 15.6% decline a year earlier.
The company's move to hive off a chunk of its entertainment asset, eOne, last year to improve focus on toy sales, digital gaming strategy, as well as international publishing deals, has also helped.
Hasbro now expects annual core profit to be between $975m (€899.5m) and $1.025bn, up from its prior forecast of $925m to $1bn.
Hasbro is seeing "encouraging" signs of early demand in its toy segment and "retailer support" for the back half of year, which includes the critical holiday shopping season, company executives said on a post-earnings call.
Steady growth in its mobile and video games, including "Monopoly Go!" and "Baldur's Gate 3", led to a 20% jump in quarterly revenue from the company's "Wizards of the Coast" unit.
Total quarterly revenue fell 18% to $995.3m in the reported quarter, compared with a 22.% fall estimated by analysts, according to LSEG data.
On an adjusted basis, Hasbro earned $1.22 per share, above estimates of 78 cents.
Barbie maker Mattel also topped Wall Street estimates for second-quarter profit, aided by a tight control on costs even as it posted a drop in sales.