By Savyata Mishra
(Reuters) -Hasbro said it expects a bigger hit to revenue in the first half of 2024 after reporting a steeper-than-expected drop in holiday-quarter results on Tuesday, as the Monopoly maker grapples with persistently weak demand for toys.
Shares of the company fell 3% in early trade, paring most of their premarket losses as Hasbro (NASDAQ:HAS) sees demand stabilizing in the second half of the year.
"We are forecasting revenue trends will improve as we move through the year with steeper declines in Q1 and Q2," CFO Gina Goetter said on a post-earnings call.
Hasbro executives warned that "a lot of older discounted inventory still remains" in its growth channels and value resellers, which will need a quarter or two to work through.
The results echo pressures seen across toy manufacturers, including rival Mattel (NASDAQ:MAT), which forecast tepid sales in 2024 after a softer holiday period.
For fiscal year 2024, Hasbro's Consumer Products unit, which made up more than half of its fiscal 2023 sales, is expected to decline by 7% to 12%.
"The Consumer Products segment remains Hasbro's biggest challenge," said James Zahn, editor-in-chief of The Toy Book magazine.
Revenue in its Wizards of the Coast segment, which includes games such as "Baldur’s Gate III" and "Monopoly Go!", is forecast to decrease by 3% to 5% owing to weakness in digital gaming.
The company recorded a net revenue decline of 23%, to $1.29 billion in the quarter ended Dec. 31, missing analysts' average estimate of a 19.3% drop to $1.36 billion, according to LSEG data.
Excluding items, Hasbro's profit per share was 38 cents, compared to the estimate of 66 cents.
Benefiting from cost-saving efforts like job cuts, the firm expects annual adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, to be between $925 million and $1 billion - better than the $709.4 million it reported in 2023.