With the fall of Toys R Us impacting sales, Hasbro fell short of third-quarter earnings and revenue estimates. The company reported revenues of $1.57 billion and earnings of $1.93 a share compared to estimates of $1.71 billion and $2.23 respectively, CNBC reported.
Wall Street analysts and Hasbro Chief Executive Officer Brian Goldner had set investor expectations high after noting that the toy maker might lessen the loss of Toys R Us’ bankruptcy in the second half of 2018. But U.S. and Canada quarterly sales dropped by 7 percent to reach $924.2 million, due to the loss of revenue from the retailer along with shipping difficulties.
Hasbro’s new partners have looked to put toys in their stores later than Toys R Us. As a result, the company saw a high demand for toys in the third quarter that is wasn’t able to meet. Goldner noted in the call that “approximately $50 million of U.S. third-quarter orders shipped in the first week of the fourth quarter.”
Toys R Us had over 700 locations in the U.S. as of April, including those under the Babies R Us banner, and it had approximately 1,600 stores globally. According to The Wall Street Journal, Toys R Us’ liquidation was the largest retail closure since Sports Authority closed nearly 500 stores. Since its leveraged buyout, Toys R Us had been burdened with over $5 billion in debt. Competition from eCommerce retailers, such as Amazon, and discount stores like Walmart, also hasn’t helped.
Earlier this year, CEO David Brandon said that Toys R Us may liquidate its operations in France, Spain, Poland and Australia. In addition, the company hoped to find a buyer for its Canadian business, which it planned to package with 200 stores in the U.S. “We’re putting a for-sale sign on everything,” Brandon told The WSJ. “Frankly, all anyone has to do is offer one dollar more.”