By Savyata Mishra
(Reuters) – Hasbro’s cost-saving efforts helped the Monopoly owner surpass Wall Street estimates for profit in the third quarter, despite weak consumer spending on toys driving a steeper-than-expected drop in sales.
The Play-Doh parent has been pursuing a business turnaround through cost cuts across its supply chain, the divestiture of its eOne live action assets and focusing on its higher-margin digital gaming business.
The company posted an adjusted margin of 25.7% for the quarter, up from last year’s 22.8%. Its inventory fell 39%.
“While the toy industry is on a rocky road, the cost-control measures that Hasbro and Mattel have put in place should put them on sounder footing in the year ahead,” said eMarketer analyst Zak Stambor.
Mattel also beat quarterly profit expectations, but lowered its annual sales forecast heading into the crucial holiday shopping season.
Shares of Hasbro fell 2% in premarket trading, reversing earlier gains, as its quarterly revenue fell for a ninth straight quarter.
“Our key initiatives around digital, licensing and reinvigorating our product innovation are bearing fruit,” said CEO Chris Cocks.
Growth in Hasbro’s key brands such as Nerf have lagged this year, with analysts noting uncertainty around its gaming pipeline and its ability to grow as gains from the earlier success of digital games “Baldur’s Gate III” and “Monopoly Go!” fizzle out.
It expects full-year revenue from the Wizards of the Coast and Digital Gaming segment to come in flat to down 1%, compared with earlier expectations of a fall between 1% and 3%.
Hasbro forecast annual revenue from its consumer products segment to fall between 12% and 14%. Its prior estimate was for a 7% to 11% decline.
Quarterly revenue came in at $1.28 billion, compared with estimates for a 13.8% drop to $1.30 billion, according to data compiled by LSEG.
On an adjusted basis, it reported earnings per share of $1.73, beating estimates of $1.28.
(Reporting by Savyata Mishra in Bengaluru; Editing by Devika Syamnath)
