Hasbro sees $100M shortfall from sales to Russia - The Entrepreneurial Way with A.I.


Tuesday, April 19, 2022

Hasbro sees $100M shortfall from sales to Russia


Dive Brief:

  • Hasbro said $100 million in revenue is at risk as it suspends shipments to Russia.
  • The note was part of the toy giant's guidance for the year ahead, which outlined low-single digit revenue growth despite the hit from its business in Russia as well as operating profit growth in the mid-single digits.
  • For the first quarter, Hasbro's revenue grew 4% year over year to just under $1.2 billion while operating profit fell nearly 20%. In its consumer products segment, the company suffered from supply chain delays, and higher freight and inventory costs.

Dive Insight:

For brands and retailers, there's little relief in sight from global and macroeconomic headwinds. Backups and bottlenecks have become part of daily operating reality at this point. In China, widespread lockdowns in Shanghai are already sparking warnings of more supply chain pain ahead.

Hasbro said in its Q1 earnings release that disruptions have hurt availability of product, which in turn has led to delays in spring sets on retail shelves. Hasbro's consumer products division has also weathered longer transit times, and the company has been purchasing earlier to hedge against out-of-stocks. Both of those things have led to an increase in inventory.

The increased supply chain costs Hasbro plans to mitigate with price hikes on consumers that start in Q2.

Russia's invasion of Ukraine has complicated the landscape further. Many brands have opted to halt or close down business in Russia as a response to the country's actions. Moreover, Russia's status as a major fossil fuel producer has sent oil prices soaring, adding further upward pressure on transportation and input costs. 

Hasbro Chief Operating Officer Eric Nyman told analysts that the company has "paused" all shipments to Russia for now, but didn't elaborate on how the company arrived at the decision to do so. "That's a situation that we're all continuing to evaluate day-by-day and week-by-week," Nyman said, according to a Seeking Alpha transcript

Hasbro is managing all of these difficulties at a critical time for the company, with new CEO Chris Cocks settling in and an activist investor pressing the company to spin off its successful game division, Wizards of the Coast, and prepping for a fight over the company's board

Cocks said in prepared remarks Tuesday that management has "commenced a comprehensive review of our strategy and operations," with a focus on growing operating profit and an eye toward multi-generational entertainment and direct-to-consumer opportunities.

The company's Q1 earnings missed consensus estimates by 7 cents per share, according to Seeking Alpha, though the company's results were in line with its own plans. 

via https://www.aiupnow.com

Ben Unglesbee, Khareem Sudlow