By Deborah Mary Sophia
(Reuters) -Hasbro Inc forecast annual sales and profit below Wall Street estimates on Thursday, hammered by a slump in demand for its toys and games from customers reeling with rising prices.
Both Hasbro (NASDAQ:HAS) and its rival Mattel Inc (NASDAQ:MAT) had seen a steep drop in consumer spending in the crucial holiday season, putting to test the resilience of toymakers to economic slowdown as customers spend more on essentials.
Price hikes in the last three years to counter a pandemic-induced surge in costs have also hurt demand for toymakers, while retailers cut back orders to keep inventories tight.
Hasbro Chief Executive Chris Cocks said the souring trends from the holiday season will continue until the third quarter.
The company also warned of a $300-million hit to revenue from a strong dollar and its exit from some licenses, brands and markets.
It lost the lucrative license to make Disney Princess toys to Mattel last year and is exiting Sesame Street and Trolls licenses this year, but is banking on a slate of blockbuster releases to support revenue.
Hasbro expects 2023 adjusted earnings per share between $4.45 and $4.55 compared with Refinitiv estimates of $4.88.
However, some analysts said the forecasts were not as bad as investors feared following the toymaker's preliminary results from January, in which it warned of slowing demand.
Hasbro shares, which had dropped more than 8% since the warning, rose 3% in early trading.
"Uncertainty has been cleared up (at Hasbro)...real detailed plans seem to be in place to start righting the ship," said D.A. Davidson analyst Linda Bolton Weiser.
Revenue at Hasbro's consumer products business - its largest and home to toys such as Nerf blasters and My Little Pony figures - is expected to decline mid-single digits in 2023, with overall revenue projected to be down low-single digits.