For toymaker Hasbro, trade wars are no fun

The Associated Press

Pawtucket, R.I. – Shares of Hasbro plunged Tuesday after the company revealed that the trade war is wreaking havoc on its supply chain and creating confusion among customers for its toys.

The company said price hikes may be on the way for consumers as it offsets rising costs.

Hasbro CEO Brian Goldner said they’ve seen multiple dates for the rollout of “List 4” tariffs, which include toys, models and puzzles. Those tariffs, which had been postponed in August over fears that it would affect the holiday shopping season, are now slated to roll out on Dec. 15.

In this Nov. 9, 2018, file photo Operation made by Hasbro is displayed shelves in the expanded toy section at a Walmart Supercenter in Houston. Shares of Hasbro are plunging after the company said the trade war is hammering its supply chain. The toymaker on Tuesday reported third-quarter net income of $212.9 million, or $1.67 per share.

But the shifting dates led to cancelled orders in the third quarter and the inability of Hasbro to meet demand as it shifted operations to accommodate companies that buy its toys and games.

“Since the administration began discussing tariffs, we have outlined the ripple effect they would have on our business,” Goldner said. “We’ve spoken about the changing order patterns in the US, whether or not tariffs are ultimately enacted. In the third quarter, the threat of and the implementation of tariffs in certain instances impacted our shipments and our ability to fully meet demand.”

Other tariffs, including a 25% tariff on $200 billion worth of goods, have already been enacted in September and hit game sales for Hasbro. Nerf sales are also being affected, Goldner said.

The company said that if the next round of tariffs go into effect in December, customers will feel it.

“We would take pricing to, again, protect our gross margin and those price increases would be passed along to consumers,” Goldner said.

Hasbro has already reduced the number of products it gets from China, which had hovered above 80% as recently as 2012. Goldner said Hasbro is attempting to lower than number to less than 50% by the end of next year.

The toymaker posted third-quarter net income of $212.9 million, or $1.67 per share. Even removing one-time costs, which brought per-share earnings to $1.84, the company fell 62 cents short of projections, according to a survey of industry analysts by Zacks Investment Research.

Its revenue of $1.58 billion is also below the $1.73 billion industry analysts had expected.

Shares of Hasbro Inc., based in Pawtucket, Rhode Island, tumbled 15%.


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