Store closures, product shortages and lower retail inventory hampered Hasbro in its fiscal second quarter, as the company dealt with the fallout of the global coronavirus pandemic.
Despite strong demand for toys in the quarter, Hasbros revenue fell 29% on a pro forma basis.
For the quarter ended June 28, Hasbro posted a net loss of $33.9 million, or 25 cents per share, compared with a profit of $13.4 million, or 11 cents per share, a year ago.
Revenue fell to $860.3 million, which was shy of the $922 million analysts expected.
Nearly 30% of its global toy and game revenue came from online sales.
The companys gaming portfolio remained strong during the quarter, with revenue in the category rising 11%, fueled by sales of Jenga, Connect 4, Mouse Trap and Twister. However, disruption in Hasbros supply chain resulted in stock levels being low and limited its number of shipments during the quarter.
Hasbro said that shipments and sales improved as stores began to reopen late in the quarter. It said this trend continued into July.
We believe the outlook improves from here, Hasbro CEO Brian Goldner said in a statement. We expect the environment to improve in the third quarter and set us up to execute a good holiday season.
Factories in China, which represent 55% of Hasbros production, were open during the quarter, but locations in the U.S., Ireland and India were closed for most of that period. The company is targeting the latter part of the third quarter to be caught up, Debbie Hancock, senior vice president of investor relations, said during the earnings conference call Monday.
Hancock noted that the cost of air freight has risen during the pandemic, warning that if the company needs to rely more heavily on this method of shipping to meet demand, costs will go up.
Hasbro, which works with major studios, also took a hit from movie theaters being closed and a lack of new blockbuster features being released on the big screen. Goldner noted that the company has a strong entertainment line-up for 2021 with partnerships and for its own slate of films.
Sales of action figures across the toy industry have been sluggish because of the delay to the movie slate. Hasbro holds the master toy license for both Marvel and Star Wars. Still, Hasbro said that sales remained strong for its Frozen 2 and Star Wars collections. Hasbro did face tough comparisons in the action figure category because of the success of Avengers: Endgame last year, which fueled sales.
Really invites speculation on what impact this could have for post-WFC.