The ongoing Toys "R" Us bankruptcy natural disaster continues to shake toymakers hard.
Hasbro's net revenues decreased 16 percent to $716.3 million in the first quarter due to the liquidation of Toys" R " Us in the USA and United Kingdom and uncertainty in its other operations, as well as retail inventory overhang, primarily in Europe.
"We're working aggressively around the world to put the impact of Toys "R" Us behind us", Hasbro CEO Brian Goldner told Wall Street analysts on a conference call.
Shares of the company fell almost 5 percent to $78.80 before the bell and were set to open at their lowest since December 2016 as the company also fell 23 cents per share short of analysts' expectations on profit.
"Our global retailers view this as an opportunity in a key consumer category and are partnering with Hasbro to develop growth plans for our brands".
At the same time, Hasbro fleshed out more of its plan to replace sales that have evaporated with the Toys "R" Us demise, one that entails much more online selling and deeper partnerships with general merchandise retailers Target (tgt)and Walmart (wmt).
He expects that "the revenue impact will be most pronounced in the first half of the year with a lesser impact in the third and fourth quarters, including the important holiday season".
Net revenue in Europe, a region where Hasbro struggled to clear excess inventory and suffered due to the liquidation of the UK Toys "R" Us operation, fell 28 percent.
Net loss for the first quarter was US$112.5 million, compared to net earnings of US$68.6 million in Q1 2017, while adjusted net earnings for Q1 2018 were US$12.4 million.
Franchise brands net revenues decreased by 19 percent to $361.7 million, partner brands declined 6 percent to $200.6 million, Hasbro Gaming dropped 22 percent to $105.2 million and the emerging brands segment was down 6 percent to $48.8 million.
Excluding certain items, Hasbro earned 10 cents per share, compared to analysts' estimate of 33 cents per share, its first miss in at least two years.