A Magic: The Gathering card is displayed on a mobile phone during a weekly tournament at the Uncommons hobby shop in New York, U.S., on Thursday, June 27, 2019.
Mark Abramson | Bloomberg | Getty Images
Toy and gaming giant Hasbro topped Wall Street expectations for the fiscal second quarter as strength in its digital gaming division helped offset continued weaknesses in its traditional toy business, weighed down by the impact of tariffs.
“While tariffs represent a headwind for the business,” Hasbro’s CEO, Chris Cocks, said on the company’s earnings call. “We are compensating for these costs through a combination of cost reductions, rebalancing our marketing spend, diversifying our supplier mix and implementing some targeted pricing actions.”
Shares of the company fell roughly 4% in Wednesday morning trading.
Here’s how Hasbro performed in the quarter ended June 29 compared to what Wall Street was expecting, according to LSEG:
Earnings per share: $1.30 adjusted vs. 78 cents expectedRevenue: $980.8 million vs. $880 million expected
The toy company reported a net loss of $855.8 million, or $6.10 per share, for the period, compared with net income of $138.5 million, or 99 cents per share, in the same quarter a year ago.
Hasbro attributed the loss to a $1 billion goodwill impairment related to its consumer products segment and the impact of tariffs. Adjusting for that impairment as well as one-time items related to restructuring and severance costs, among others, Hasbro reported adjusted earnings per share of $1.30.
Overall revenue declined 1% from the same quarter last year, but the company’s gaming division continued to outperform. Wizards of the Coast and digital gaming brought in $522.4 million in sales, up 16% year over year. Hasbro cited strong demand for Magic: The Gathering and Monopoly Go!
“This isn’t just a one-off moment. It’s a clear indication of the power of Magic’s community,” Cocks said. “Magic is stronger than ever, and we’re just getting started.”
Meanwhile, the company’s consumer products segment saw revenue fall 16% to $442.4 million, pressured by “anticipated softness in Toys driven by retailer order timing and geographic volatility,” Hasbro said in the release.
Revenue in the entertainment segment dropped 15% to $16 million.
Hasbro raised its full-year guidance and now expects mid-single-digit revenue growth, adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, of between $1.17 billion and $1.2 billion, and adjusted operating margins of 22% to 23%.
