(Reuters) - Toymaker Hasbro Inc (HAS.O) missed analysts’ estimates for quarterly revenue and profit on Monday, as the demise of major retail partner Toys ‘R’ Us hurt sales in the United States and Europe, sending its shares down 9 percent in early trading.
Investor expectations were high going into the quarter after Chief Executive Officer Brian Goldner and Wall Street analysts indicated that Hasbro may mitigate some of the loss from the toy retailer’s bankruptcy in the second half of the year.
However, Hasbro reported a 7 percent drop in quarterly sales in the United States and Canada to $924.2 million, due to the loss of Toys ‘R’ Us revenue and an inability to meet shipping demands of other retailers.
Hasbro and rival Mattel Inc (MAT.O) have scrambled to find new avenues to sell their products following the sudden collapse of Toys ‘R’ Us, once the world’s largest standalone toy retailer, last year.
The drop in Hasbro’s international sales was much steeper. The 24 percent fall was also due to changing consumer shopping trends.
The industry’s traditional players have also been rattled in recent years by thousands of manufacturers selling on Amazon.com (AMZN.O) and other e-commerce sites, as well as kids preferring electronic games over physical toys.
Hasbro has looked to cushion the blow from these headwinds by partnering with movie studios such as Marvel and Disney, as well as picking some of its properties and translating them to successful television shows, movies and online videos. The biggest example being the “Transformers” franchise.
But sales in Hasbro’s franchise brands, which also include Monopoly and Nerf toys, fell 5 percent, partly due to the absence of a new Transformers movie release in the quarter.
The company also said on Monday it was restructuring its business, which would include job cuts and result in charges of $50 million to $60 million in the current quarter.
Net earnings fell to $263.9 million, or $2.06 per share, in the third quarter ended September, from $265.6 million, or $2.09 per share, a year earlier.
Excluding certain items, Hasbro earned $1.93 per share, missing the average analyst estimate of $2.23, according to Refinitiv estimates.
The company’s revenue fell 12 percent to $1.57 billion, also falling short of expectations of $1.71 billion.
Shares of Pawtucket, Rhode Island-based Hasbro were down 7.2 percent at $91 before the bell on Monday, while those of Mattel were down nearly 3 percent.
Hasbro’s shares have gained about 8 percent since the start of the year, while Mattel’s have dropped over 7 percent.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Sriraj Kalluvila