The bankruptcy of Toys`R`Us weakened Hasbro Inc`s forecasts for the holiday season in otherwise strong third-quarter results on Monday, boding ill for a sector worried by the collapse of a major customer.
The Amazon-fueled move away from brick-and-mortar retailing was behind the surprise filing last month by Toys`R`Us, which left Hasbro exposed to the tune of $60 million in unsecured claims for payment.
The U.S. toymaker, which was selling about 9 percent of its total inventory through Toys`R`Us stores, said third-quarter profit rose 3 percent and revenue 7 percent - above analysts` estimates - even as the bankruptcy began to hurt operations.
Hasbro`s estimate for the fourth quarter of an increase of 4 to 7 percent over last year`s $1.63 billion, however, was below Wall Street expectations.
"As a result of the Toys`R`Us bankruptcy filing in the U.S. and Canada, there was a negative impact on our quarterly revenues and operating profit," Hasbro`s Chief Executive Brian Goldner said in a statement.
"We continue to work closely with Toys`R`Us as we head into the holiday period."
The fourth-quarter growth estimates translate to revenue of $1.7 billion to $1.74 billion, below the average analyst estimate of $1.82 billion, according to Thomson Reuters I/B/E/S.
Toys`R`Us, the largest toy retail chain in the United States, filed for bankruptcy in September with $5 billion due to creditors. If toymakers` inventory is trapped in the process, it should weigh on sales in the crucial holiday shopping period.
Smaller rival Jakks Pacific Inc had also said in September it would post a loss in 2017 due to charges related to the bankruptcy.
Hasbro reported a profit of $265.6 million, or $2.09 per share, for the third quarter and revenue of $1.79 billion, helped by strong demand for games such as Monopoly and Magic: The Gathering and My Little Pony toys.
Analysts on average had expected sales of $1.78 billion and a profit of $1.94 per share.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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