Shares of toymaker Hasbro, Inc. (ticker: HAS), maker of the iconic Monopoly board game, Easy-Bake Ovens and other brands, immediately fell 8 percent after the company reported earnings and revenue beats in the second quarter.
With HAS stock up roughly 50 percent in 2017 prior to Monday’s earnings report, traders may be taking profits on the red-hot stock.
Hasbro reported second-quarter earnings of 53 cents per share on revenue of $972.5 million. Both numbers slightly topped consensus analyst estimates of 46 cents and $972.4 million, respectably. While EPS climbed 29.2 percent from a year ago and revenue was up 10.6 percent, the company’s sales beat was its smallest in six quarters.
“Franchise Brand, Hasbro Gaming and Partner Brand revenues grew year-over-year, and revenue increased across all geographic regions,” CEO Brian Goldner says. “We entered the important second half of the year with strong consumer momentum, a robust and diverse entertainment slate and compelling new brand initiatives.”
Franchise Brand sales, the company’s largest and most important segment, were up 21 percent from a year ago. Gaming sales increased 6 percent, while emerging brands sales were down 14 percent. The company attributed the weakness in emerging brands to revenue declines in its Playskool, Super Soaker and Easy-Bake Oven brands.
Geographically, Hasbro reported 16 percent sales growth in the U.S. and Canada and 6 percent growth in international markets. International sales in the Asia-Pacific region jumped 19 percent from a year ago.
While investors may be disappointed with the modest revenue beat, Jefferies analyst Stephanie Wissink says the company faced a couple of unique headwinds in the quarter. Specifically, winding down of a Star Wars brand toy cycle and a delayed “Spiderman: Homecoming” merchandise launch was a bad combination during the second quarter.
Despite the earnings beat, Wissink says the company’s heavy reliance on its franchise brands growth is cause for concern. “The partner brands growing just 1 percent looked…
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