Leading toy maker Hasbro (NASDAQ:HAS) plans to eliminate 1,000 jobs or about 15% of its workforce, as part of its organizational changes. The company also announced its preliminary fourth-quarter results, which revealed a 17% decline in Q4 2022 revenue to $1.68 billion and a GAAP loss per share in the range of $0.93 to $1.00.
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Hasbro, which is scheduled to announce its Q4 and full-year results on February 16, expects Q4 adjusted EPS in the range of $1.29 to $1.31. Analysts were expecting revenue of $1.92 billion and adjusted EPS of $1.52. Hasbro shares fell nearly 7% in Thursday’s after-hours trading and have declined 25% over the past 52 weeks.
Despite solid growth in Wizards of the Coast and Digital Gaming, Hasbro Pulse, and licensing businesses, Hasbro’s Q4 results were weak due to the impact of macro pressures on the Consumer Products business. Preliminary numbers indicate a 22% growth in the Wizards of the Coast and Digital Gaming segment revenue and a decline of 26% and 12% in the revenues from Consumer Products and Entertainment segments, respectively.
Meanwhile, the planned job cuts will begin within the next several weeks. Hasbro also announced the departure of Eric Nyman, president and COO, as part of its leadership changes. The company expects its organizational changes and supply chain investments to generate cost savings of $250 million to $300 million in annual run-rate by 2025-end.
Under the Blueprint 2.0 strategy, announced in October 2022, Hasbro aims to reduce costs and focus on fewer, bigger brands as well as the gaming, digital, and the direct to consumer and licensing businesses.
Is Hasbro a Buy or Sell?
Earlier this month, BMO Capital Markets analyst Gerrick Johnson trimmed his earnings estimates for Hasbro, noting that “HAS’s holiday season toy sales were amongst the weakest in the North American toy industry.”
Johnson opined that the company is feeling a “COVID hangover” in its games and Play-Doh lines as most families significantly purchased games, especially the Hasbro classics, during lockdowns. Johnson reiterated a Hold rating on HAS stock and lowered the price target to $66 from $74.
Wall Street is cautiously optimistic about Hasbro, with a Moderate Buy consensus rating based on three Buys, three Holds, and one Sell. The average HAS stock price target of $74.50 implies 16.8% upside potential.
