Hasbro (NASDAQ:HAS) reported worse-than-expected adjusted earnings per share for the first quarter.
The play and entertainment company reported Q4 adjusted EPS of 57c, down from 1$ per share in the year-ago period and below the consensus estimates of 64c per share. Net revenue came in at $1.16 billion, up 4.3% YOY and just above the consensus projection of $1.15 billion.
The operating margin in Q1 stood at 10.3%, compared to 13.2% in the same period last year.
Moving forward, Hasbro said it expects mid-single-digit growth for adjusted operating profit. The company said it will continue with its share repurchase program and plans to buy back $75 - $100 million this year. The company expects low-single-digit revenue growth in its consumer product business for the full year.
Hasbro noted that supply chain challenges affected product availability, resulting in spring set delays. Furthermore, increased inventory and freight expenses weighed on profits year-over-year. To compensate, Hasbro plans to raise product prices in the second quarter.
"Based on our current plans, we now believe mid-single-digit adjusted operating profit growth and a 16% adjusted operating profit margin is achievable on revenue growth of low- single digits," said Chris Cocks, CEO of Hasbro.
Goldman Sachs analyst Michael Ng reiterated a Buy rating and a 12-month price target of $111.00 per share.
“We expect HAS to trade higher on the improvement in EBIT guidance (MSD growth v. LSD prior) despite headwinds from supply chain issues and the risk to $100 mn of revenue in Russia. In addition, we're encouraged by HAS' resumption of share repurchases. HAS reiterated its revenue growth outlook for LSD and we're encouraged by better-than-expected momentum in Consumer Products (My Little Pony, Spider-Man) and the upcoming benefits from price increases in 2Q,” Ng said in a memo.
Stifel analyst Drew Crum said that Hasbro reported 1Q results that were “mixed relative to our model,” but he is positive in the context of a slightly raised '22 guidance.
By Senad Karaahmetovic