Hasbro (HAS) is encouraging parents to shop early for popular toys this holiday season, warning that supply challenges may lead to shortages on shelves.
On the company’s second-quarter earnings call Wednesday, Hasbro CEO Chris Cocks said ongoing shifts in government trade policy have prompted many retailers to delay their holiday orders. That hesitation could make it difficult for Hasbro to replenish stock if demand spikes.
“A lot of hot products are going to likely be out of stock this holiday,” Cocks said, highlighting popular items like Play-Doh Barbie, Nano-Mals, and baby Evie.
“We’re just not going to be able to [replenish] them,” he added, according to a transcript provided by AlphaSense. “If you’re a mom or a dad, you’re probably going to want to go and buy that early.”
The delayed ordering contributed to a 16% year-over-year revenue drop in Hasbro’s consumer products segment last quarter, which includes toys like action figures and plush dolls, CFO Gina Goetter said.
Hasbro’s warning comes as many U.S. shoppers have already been adjusting their seasonal buying habits. According to the National Retail Federation (NRF), consumers have been starting their back-to-school and holiday shopping earlier in recent years in an effort to save and avoid last-minute stress.
“They want it to feel special for their kids,” said Katherine Cullen, NRF’s vice president of industry and consumer insights, during a webinar on Wednesday.
Cullen noted that more families may prioritize their immediate circle when buying gifts this year. “Shoppers may need to be more discerning about who they buy for,” she said, possibly scaling back on presents for extended family or acquaintances.
Hasbro shares slipped less than 1% to close at $76.84 on Wednesday, though they remain up 37% year-to-date.
Despite continued weakness in its toy and entertainment segments, Hasbro beat Wall Street’s second-quarter expectations thanks to strong performance in its gaming division.
“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,” said Cocks during the earnings call.
Here’s how Hasbro performed in Q2 ended June 29, compared to LSEG estimates:
- Adjusted EPS: $1.30 vs. $0.78 expected
- Revenue: $980.8 million vs. $880 million expected
However, the company reported a net loss of $855.8 million, or $6.10 per share, largely due to a $1 billion goodwill impairment tied to the consumer products segment and the impact of tariffs. Excluding one-time items like restructuring and severance costs, adjusted earnings reached $1.30 per share.
Overall revenue declined 1% year-over-year, but digital and tabletop gaming remained a bright spot. The Wizards of the Coast and digital gaming segment pulled in $522.4 million, up 16% from a year ago, driven by 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,” said Cocks. “Magic is stronger than ever, and we’re just getting started.”
Meanwhile, the consumer products segment saw a 16% revenue drop to $442.4 million, affected by “anticipated softness in Toys driven by retailer order timing and geographic volatility.” Entertainment revenue fell 15% to $16 million.
Despite the challenges, Hasbro raised its full-year outlook. It now expects mid-single-digit revenue growth, adjusted EBITDA between $1.17 billion and $1.2 billion, and adjusted operating margins of 22% to 23%.
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